News: Too Early To See Drop In Home Prices

Jun 2, 2020

Despite the apparent drop in GDP and the hike in unemployment, Jones Lang Wootton ED Prem Kumar believes it is still too early to see Covid-19 pandemic’s impact on Malaysian property prices. 

This comes as the six-month moratorium on loans helped mitigate the virus outbreak’s impact on home prices, reported The Malaysian Reserve.

“It is still too early, especially since the moratorium on loans provides a buffer for a period of six months. Even though people may have lost their jobs or their employment income may be affected, the fact that they do not have to service their loans for six months provides short-term holding power,” he said.

To help ease the burden of businesses and consumers brought about by the Covid-19 pandemic, Bank Negara Malaysia imposed a six-month moratorium on financing and loan payments from April to September this year.

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The measures include an automatic six-month loan moratorium for small and medium enterprise and individual borrowers, excluding credit card balances that could be converted into term loans of not more than three years with annual interest cap of 13%.

Restructured and rescheduled loans need not be categorised as credit-impaired, while banks are permitted to draw down a 2.5% capital conservation buffer, operate liquidity coverage ratio of less than 100% and reduce regulatory reserves to 0%.

Chan Ai Cheng, President Elect of Malaysian Institute of Estate Agents, said the property cooling measures rolled out by the government over the years helped curb over speculation.

“Prices will adjust if there are owners who are in need to offload quickly,” she said.

“In established locations where owners have lived for many years, prices are very unlikely to fall, as firstly, they are mainly owner occupiers and secondly, they would have very much paid off most of their loans.”

Despite the crisis, Chan expects property values in prominent locations to hold.

However, Prem believes there is greater bias for a downward price adjustment at the present juncture, including properties found in prominent locations since rentals are already witnessing downward adjustments.

“This specific trend is anticipated to continue in the immediate future, especially for the next three to six months,” he added.

Chan predicts rental demand to remain steady as people will more likely rent than acquire a property during uncertain times.


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