Rising value of residential properties poses real concern
Several market watchers are calling for the Malaysian government to
address the issue of affordability of residential properties as constantly high
prices became a real concern to many people.
According to a report by The Star, Dr Yeah Kim Leng, Chief Economist of Ratings Agency Malaysia Holdings Bhd (RAM), said, "We have computed the affordability (issue). Prices have risen to a level that has created some concern. In fact the International Monetary Fund (IMF) in its Article 4 consultation report has mentioned that this is the main risk or vulnerability facing the Malaysian economy: overvalued house prices."
"It is not a bubble yet largely because for certain segments the income level is sufficient to absorb those kind of (high priced) houses. But there comes a point where you will find declining demand largely because of rising vacancies or declining rental yields that will help to cap property prices," Yeah added.
While he expects for an eventual soft landing of Malaysia's property market, Dr Yeah believed that developers should be ready for changes in market dynamics.
"Developers must take the risk that should there be a slowdown or market crash (that) they are in a position to absorb it without creating problems for the banking sector or economy. But at this juncture we are quite comfortable that most developers are going in (to the market) with their eyes fully open."
"Most of the property companies that we have rated (credit rating) are fairly strong in their credit quality. Overall we are looking at maybe certain smaller developers that will be at risk but by and large I think that the property market is in a sustainable basis. But watch out for too high prices that will create affordability problems."
Meanwhile, total corporate bond issuances for the whole of Malaysia is expected to range between RM80 billion and RM85 billion this year, said Foo Su Yin, Chief Executive Officer of RAM.
"The issuance in the first four months of RM44 billion has already exceeded what was (at the level) half year last year so the RM80 billion to RM85 billion is achievable this year. We expect most of the bond issuances to come from the infrastructure and the banking sector."
Image: The Star
For the latest property news, trends, resources and expert opinions, visit our Property News section. Home buyers, sellers or property renters looking for Malaysian Properties, may like to visit http://www.homeguru.com.my today.
According to a report by The Star, Dr Yeah Kim Leng, Chief Economist of Ratings Agency Malaysia Holdings Bhd (RAM), said, "We have computed the affordability (issue). Prices have risen to a level that has created some concern. In fact the International Monetary Fund (IMF) in its Article 4 consultation report has mentioned that this is the main risk or vulnerability facing the Malaysian economy: overvalued house prices."
"It is not a bubble yet largely because for certain segments the income level is sufficient to absorb those kind of (high priced) houses. But there comes a point where you will find declining demand largely because of rising vacancies or declining rental yields that will help to cap property prices," Yeah added.
While he expects for an eventual soft landing of Malaysia's property market, Dr Yeah believed that developers should be ready for changes in market dynamics.
"Developers must take the risk that should there be a slowdown or market crash (that) they are in a position to absorb it without creating problems for the banking sector or economy. But at this juncture we are quite comfortable that most developers are going in (to the market) with their eyes fully open."
"Most of the property companies that we have rated (credit rating) are fairly strong in their credit quality. Overall we are looking at maybe certain smaller developers that will be at risk but by and large I think that the property market is in a sustainable basis. But watch out for too high prices that will create affordability problems."
Meanwhile, total corporate bond issuances for the whole of Malaysia is expected to range between RM80 billion and RM85 billion this year, said Foo Su Yin, Chief Executive Officer of RAM.
"The issuance in the first four months of RM44 billion has already exceeded what was (at the level) half year last year so the RM80 billion to RM85 billion is achievable this year. We expect most of the bond issuances to come from the infrastructure and the banking sector."
Image: The Star
For the latest property news, trends, resources and expert opinions, visit our Property News section. Home buyers, sellers or property renters looking for Malaysian Properties, may like to visit http://www.homeguru.com.my today.
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