KUALA LUMPUR (Jan 16): The Malaysian property market will continue to be flat this year, according to CBRE | WTW managing director Foo Gee Jen (pictured) at the launch of the CBRE|WTW 2020 Asia Pacific Real Estate Market Outlook Report today.
"I believe property transactions in 2020 will not be as high as 2019 as the HOC (Home Ownership Campaign) has not been extended to this year," he said.
He noted some trends that will be more apparent in the near future including the rise of millennial property buyers and the expanding senior population (retirees).
"I also believe property demand will be driven by urbanisation. There is still room for the urbanisation rate to increase," he added.
On the large property overhang numbers in Malaysia, Foo said one reason for the overhang is high housing prices, especially in urban areas.
"Ultimately, when it comes to housing prices, we need market forces to resolve the problem. Property prices could be determined by buyers."
He shared that in some developed countries such as the UK, consumers are able to dictate property prices by bargaining even when buying from the primary market.
"Although the primary market only accounts for less than 35% of overall transactions in Malaysia, prices in the market overall follow the primary market," said Foo.
"In Malaysia, it is a take it or leave it situation when it comes to new projects," he adds.
"It is time for the power to determine the pricing be returned to buyers. Buyers should determine the price, not the other way round," said Foo.
He expects property transaction volume to improve in 2019, thanks to the Home Ownership Campaign (HOC) which helped clear some stock. However, the overhang situation remains a concern as there is a number of new launches adding supply into the market.
On the issue of affordability, Foo said developers should adopt the industrialised building system or IBS.
"This is just like the industrial 4.0, if we continue to rely on cheap foreign labours, the industry's pace of IBS adoption will be hampered," he said, adding that there is also not enough incentivise for IBS adoption.