The local property industry continues to face many obstacles despite signs of steady economic growth, which was announced recently for the second quarter and the first-half, underpinned among other factors by a jump in construction activity as well as healthy consumption.
Among the challenges the industry faces, according to Asian Strategy & Leadership Institute chairman Tan Sri Jeffrey Cheah, is the market perception that the industry is heading towards a property bubble, which is not backed by reasonable evidence.
“As a developer I'm convinced as of now that we shall not be experiencing any such property bubble, as our property prices are still affordable compared with some of our neighbouring cities in the region,” Cheah, also Sunway Bhd chairman, said at an address during the launch of the 15th National Housing and Property Summit.
He cited Bank Negara's second-quarter gross domestic product data which indicated a 5.4% year-on-year growth despite external challenges as signs that private consumption remained steady. Central bank data showed the construction sector, which includes housing and civil infrastructure activity, surging 22%.
Cheah said it was also untrue that property prices were being driven up due to foreigners' purchases in the country as transactions by foreigners had historically hovered at 3% compared with 20% in Singapore.
He added that 54% of total residential transactions in 2011 were below the RM150,000 range.
Cheah said the other challenge the industry faced was the lack of skilled workers, which caused delays in the completion of projects. He said it was important for the Construction Industry Development Board to continue engaging with both industry players and non-governmental organisations to address this issue in order to improve the quality of finished projects.
Cheah said there needed to be combined efforts by the Govern-ment and industry players to address these issues as well as come up with strategies to overcome them.
He urged the Government not to take “too drastic measures” to cool the property market as this “can kill market sentiment and slow supply of housing further.”
“The Government should not in-crease the real property gains tax. I also hope it will not further restrict lending to the property sector or introduce new measures that will make it more difficult for house buyers to purchase properties,” Cheah said.
He also stressed the sustainability of the industry, which would be important to ensure continued buoyant economic growth and resilience.
Meanwhile, Housing and Local Government Minister Datuk Seri Chor Chee Heung said new fiscal policies might be introduced in Budget 2013, as current measures taken to control house prices had not been very effective.
Despite the Government's measures to curb the rise in house prices, such as the increase in RPGT and a restriction on loan-to-value ratios on third properties and above, there were feelings that the Government has not done enough.
“I will be recommending a review of fiscal policies in the next budget,” Chor said.
Cheah's remarks on the property bubble continue to divide analysts who closely follow the industry with Kenanga Investment Bank research head Chan Ken Yew pointing out that a bubble might exist to a certain extant as prices continued to be above what younger workers were able to afford.
“This is because their salary can't catch up with the current house prices. This problem is not only evident in Malaysia but also in Hong Kong and Singapore,” he said.
Increasing the Employees Provident Fund's (EPF) withdrawal rate to be utilised for the down payment of a member's first home could solve this problem, he added. Currently, the EPF allows for a 30% withdrawal from Account 2. “If the Government allows for a 50% withdrawal, this would help to lower the burden,” he said.