KUALA LUMPUR (Feb 28): The Malaysian property sector outlook will continue to consolidate and is expected to stay flat in 2017, given the cautious sentiment, according to Socio-Economic Research Centre (SERC) executive director Lee Heng Guie.
 
“I am still very cautious about the consumer spending in the private sector. This year, we have inflation that we have to cope with,” he said at the Real Estate and Housing Developers’ Association Malaysia (REHDA) Institute’s regional economic and business outlook conference 2017.
 
According to the Statistics Department, Malaysia’s January 2017 inflation rose at 3.2% on year-on-year (y-o-y).
 
Commenting on the 2017 gross domestic product (GDP) growth, Lee sees it as cautiously positive at 4.3%, as compared to 4.2% last year.
 
“The [GDP] should be holding above 4%,” said Lee, explaining that the economy has bottomed up and should hope to see stronger traction, going forward.
 
He added there will be a stronger domestic demand and firmer external demand, if higher energy and commodity prices provide a small tailwind.
 
Lee explained that home lending practice must not compromise on the borrowers’ credit-worthiness and their financial capacity to service the loans given the high household debt.
 
With a high household debt of 89.1% in 2015, Lee said 48% accounted for buying homes, while the remaining were made up of hire purchases, personal loans and credit loans.
 
Lee said he sees 2016 household debt to ease a bit.
 
“I don’t think it will cross 89%,” he said.
 
“We can see [that] the household debt has moderated since 2011 and has increased at a slower rate,” Lee added.
 
Lee said for a comfortable household debt, it should be at 60% to 70%, although he added it will take some time for Malaysia’s household debt to be at that level.