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Changing scenario among Malaysian property investors [25-02-2013]  
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A FEW years back, property purchases were fuelled by a fear that prices will spike and that if people did not buy then, they would not be able to afford one anymore.

Aside from those who wanted a roof above their heads, there were also investors, called “flippers”, who buy to flip their properties upon capital appreciation within a year or two and those who bought into the “snob appeal” that luxury property offered.

Malaysian Institute of Estate Agents (MIEA) president Nixon Paul, however, says the scenario is slightly different now among Malaysian property chasers. Investors are no longer as enthusiastic about flipping.

At the recent Real Estate and Housing Developers’ Association Malaysia (Rehda) second half property industry survey briefing, he notes that while one of the reasons behind this is that investors are a bit more conservative with the General Elections coming up, there are also a lot of mismatched expectations from both buyers and sellers.

“When you talk to the average investor, the first thing they would say now is to wait and see,” Paul says.

Paul observes that opportunities for flippers are not as many now because they would need a longer period to reap the returns.

“Investors can still make money but they will have to hold for three to five years (for properties they buy now),” he says.

Paul says while the market is there and people are still buying, the purchasing trend has become more selective. On price trends, he says the market now has a lot of valuation and asking price mismatches, as well as unrealistic demands from buyers.

“There are a lot of mismatches out there (where valuation does not match asking price) and that makes it difficult for valuers as well,” he says.

These mismatches, he believes, stems from emotionally-invested individual property buyers and sellers.

“A man may want to sell his house in SS3, Petaling Jaya at RM4mil when bankers value it at only RM3mil,” he gives an example of what he dubs “temptation versus asking price”.

On the other hand, some buyers have unrealistic expectations of the property they want, such as demanding too low a price for properties in prime locations.

Deputy president Siva Shanker says in a report of the residential market overview that estate agents have found it difficult to match the expectations of the buyers and sellers in 2012.

“Because there was unprecedented growth as high as 20% to 30% in the market in 2011, sellers continued to expect the same growth rate in 2012,” he says.

Siva explains that sellers, riding on the excitement from 2011, continued to expect 30% growth in prices but that did not happen. Hence, the number of transaction automatically dropped.

Based on that, he points out that the number of houses available where the sellers’ asking prices were close to market value remains low.

“In spite of this, 2012 fared reasonably well. There is talk that there was a 10% to 15% drop in the quantum of transactions in the secondary market but there is no numbers from the second half of last year yet,” he says.

Siva adds that despite the slight slowdown in terms of numbers, 2013 will remain “rock steady” and prices will continue to climb.

To all this, Rehda president Datuk Seri Michael Yam says that the situation suggests sellers now have better holding power compared with 15 years ago.

“In the late 1990s, deals closed much faster as many sellers were desperate to sell because they had problems servicing their loan,” he says.

He adds: “People now have more money in their pockets and lower loans to repay because their property purchases are mostly paid down. Therefore, more are holding onto their property to ask for a much higher price later on.”

Yam says property owners are also faced with the reality that they would not be able to find an equal substitute for their well-located property if they sold their houses.

“The secondary market is alive and well, with RM60bil sales in the 2011 compared with about RM30bil of new sales in the primary market,” he says, “Which confirms possible inadequate supply of new units, either in the locations buyers want or at the right pricing.”

In its presentation, MIEA showed that the secondary market achieved slightly above RM30bil sales in the first half of 2012.

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