NEW COOLING MEASURES RESULTS IN PROPERTY BUYERS AND INVESTORS TAKING A CAUTIOUS APPROACH, REVEAL SURVEY BY IPROPERTY.COM MALAYSIA

Kuala Lumpur, 24th March 2014 – The iProperty.com Asia Property Market Sentiment Report 2014 for the first half of the year revealed that Malaysian’s are adjusting to the new cooling measures, resulting in them adopting a cautious approach to purchasing or investing in property.

The survey, conducted across the iProperty Group’s leading network of property websites in Malaysia (iProperty.com.my), Indonesia (Rumah123.com and rumahdanproperti.com), Hong Kong (GoHome.com.hk) and Singapore (iProperty.com.sg) served as a bellwether to gauge the opinions consumers in the region.

Attracting close to 20,000 respondents, 6,865 respondents from Malaysia, the survey revealed consumer’s motivations, intentions and preferences in acquiring property in Asia.

Key Findings in Malaysia:

Demographics
·         Consistent with previous findings, slightly more than half (52%) are from the 26-35 age group, revealing that more young Malaysians are looking forward to owning their own home.

·         About a quarter (27%) are from the mid-to upper middle-income group with an annual household income of MYR80,001 to MYR160,000, while 15% belong to the middle-income group of MYR60,001 to MYR80,000.

·         Most respondents considered themselves as first-time homebuyers (an increase from 29% to 32%). Only 1% considered themselves property sellers, which might indicate that most respondents are either holding back on selling or are content with their current dwelling place.

·         Majority of respondents (80%) hail from Klang Valley (Kuala Lumpur, Selangor, Putrajaya) and still intent on purchasing property in the same area.

·         The top three considerations when purchasing property are location, price and size. Location and price are interlinked and has been consistent factors in the previous surveys.

·         Online is still the preferred source of information for respondents when looking for property, with 82% favoring that option. A distant second is newspapers and magazine at 13%.

·         There is a drop in respondents (from 30% to 24%) who intend to purchase a property in the next 6 months. The market stood at a standstill after the announcement of Budget 2014, and there was a knee-jerk reaction in sales.

·         Despite the slight dip in interest in ‘Terrace House’, ‘Private Condominium / Serviced Apartment’ and ‘Semi-detached’, these properties are still heavily favored by respondents.

Views on Budget 2014

v  The Real Property Gains Tax Increase

§  Almost an equal number of respondents felt that the increase in RPGT will lead to an increase in prices as 34% chose ‘Speculation and property prices will increase’ and ’34% chose ‘Speculation will decrease and property prices will increase’.

§  Respondents were clear that the RPGT should not be the same for Malaysian citizens and non-citizens.

§  Additionally, the ringgit, which dropped to a new 3½-year low against the US dollar in end January 2014, will continue to be under pressure in 2014 amid a volatile global market. This might have influenced 47% of respondents to think that the increase of minimum price for foreign property purchasers will not deter potential foreign investors.

§  Instead of an increase in RPGT, 46% of respondents felt than an increase in stamp duty for the third property purchase onwards would better curb speculation.

v  Removal of Developer Interest Bearing Scheme (DIBS)

§  46% of respondents felt that the prohibition of the DIBS scheme will help curb speculation in the market. 31% believed that it would not.

§  Almost half of these respondents (47%) agreed that the scheme should be maintained exclusively for first-time home buyers, while 38% felt that it should apply to all buyers.

§  The market’s opinion is also mixed with regards to whether the removal of the scheme will increase property prices. 39% felt that prices would increase while 32% believed that it would not.

v  Increase in Minimum Purchase Price for Foreigners

§  47% of respondents felt that the increase in the minimum purchase of property from RM 500,000 to RM 1 million would not deter potential foreign investments.

v  Affordable Housing – PR1MA

§  There is lukewarm response to homes under PR1MA, Malaysia My First Home scheme, and Malaysia My Second Home scheme. This might be due to the fact that most respondents are from Klang Valley and are keen to look for housing options that are within or close to central areas, where property prices are often more than RM450,000 (above the allowable amount under PR1MA and Malaysia My First Home scheme).

§  The top three factors of importance with regard to PR1MA for respondents were:

o   Location
o   Public Transportation
o   Amenities

Sentiments and Outlook on the Property Market for H1 of 2014

Shedding further light on the fifth iProperty.com Asia Property Market Sentiment (H1) 2014 survey findings, iProperty Group’s Chief Executive Officer, Shaun Di Gregorio said that Malaysians are taking a cautious approach towards property investments are they are adjusting to the new cooling measures.

“Budget 2014 saw the introduction of various cooling measures and with it coming into effect this year, property buyers and investors are waiting to see how these cooling measures will affect the property market,” said Di Gregorio.

He added that similar to previous survey findings, affordability and rising house prices continue to remain a major concern.  On a scale of 1 to 10 (1 being very affordable and 10 not being affordable at all, respondents rated the current affordability of property prices at 7.5. Due to this, 46% of respondents doubt that the property market will pick-up in the next 6 months, while only 35% had a positive outlook.

“Millions of middle-class Malaysians are still grappling with the biggest increase in electricity and petrol cost since 2008, in addition to record-high property prices, elevated household borrowings, and slower pay increases than lower-incomes earners. With this, 79% of respondents expect the implementation of the Goods and Services Tax (GST), effective in 2015, will come with the risk of inflation,” he elaborated.

The survey findings also showed that 70% of respondents believed that the implementation of the GST will lead to increase in property prices.

In terms of which areas respondents thought were highly popular for investment, the Petaling Jaya , Ara Damansara and Puchong were key hot spots in the Klang Valley. Outside of Klang Valley, Iskandar Malaysia, Georgetown, Penang and Melaka were favourites.

“It was also interesting to note that 51% of Singaporean respondents expressing strong interest in wanting to invest in Iskandar Malaysia. Landed property was the key favourite followed by private condominiums,” he added.

The survey also revealed that the strong Singapore dollar and growing interest from other foreign purchasers particularly in the locality of Nusajaya and Medini will continue to drive the growth of the residential market. This is supported by the survey’s result, where 64% of respondents answered ‘Affordable property prices’ as the main reason for purchasing in Iskandar Malaysia.

In conclusion, Di Gregorio said that while Malaysians digest and react to the latest cooling measures, the property market can expect a slow-down.

The full survey report can be downloaded directly from www.iproperty.com.my