Sales of high-end homes has slowed but sales of affordable homes should remain good, said Real Estate & Housing Developer's Association Malaysia (Rehda) national council member Wan Hashimi Albakri Wan Ahmad Amin Jaffri.
He said the slow-down in demand for high-end homes could be attributed to stricter home loan approvals as well as cooling measures such as the 70% cap on loans to finance third home purchases.
"The resistance in sales is more to do with financing. Buyers of homes priced RM2 million and above are usually not buying their first home but their second or third homes. When you buy a third home for RM3 million third home, you have to come up with 30% or RM1 million as a deposit," he explained at a press conference on Tuesday, July 19.
However, he stressed that high-end homes represented only a small percentage of the market.
He does not see sales of affordable homes being affected as demand is still strong and the market is not as speculative as the high-end market.
A new segment of affordable homes was introduced recently with the government's 1Malaysia Housing Programme or Program Perumahan 1Malaysia (PR1MA). Under the programme, homes will be built in suburban and urban parts of the Klang Valley where there is a lot of demand for middle-class homes and these homes will be priced from RM150,000 to RM300,000.
When asked to comment on the volatility of the property market, Wan Hashimi said: "The property market is naturally cyclical, whether the cycle will last five, eight, or 10 years. In the past it was probably 10 years. Now, from what we observe, the cycle is getting shorter. "So, whether it is one, three, or five years, I think there is a lot of contributing factors to the dynamics of the market cycle."
He added that prices of homes are not coming down but going up as building materials have gone up within 8% to 10% and developers would want to reserve the profit margin. He believes prices of homes, on average, will appreciate by 5% yearly.
He was speaking after the launch of the My City photography competition, held in conjunction with the World Class Sustainable Cities (WCSC) 2011 conference that will be held on Sept 20 this year.
The competition will see aspiring shutterbugs take pictures that best represent their cities.
It is open to all amateur photographers and is divided into the Open and Under-18 categories, with eight prizes in each category.
The winning entries will be unveiled at the WCSC 2011 conference, which will also feature the winning designs of the River of Life (RoL) design competition.
Meanwhile, the conference will focus on city transformation and brownfield redevelopment and feature Chen Chu, mayor of Taiwan's tourist city Kaohsiung and Sebastian Moffat, CEO and president of The Consensus Institute in Canada as some of its keynote speakers.