Sarawak’s property outlook for 2019

Sim Kiang Chiok

KUCHING, Dec 31: The change of federal government in May this year coupled with the maiden budget by the Pakatan Harapan (PH)-led government has exerted a significant impact on the direction of the country’s economic outlook.

It is also affected by the global economy, which is caught in the crossfire of the trade war between China and the USA, UK Brexit, low prices of commodities, weak ringgit and the raising of minimum wages, said Sim Kiang Chiok, chairman of Sheda Kuching Branch.
In Sarawak this year, there are about 1,250 units of various types of property overhang, which is not as severe as in Malaya.

“These properties overhang can be due to poor location, poor design, mismatch of type of property to the demand in the particular location e.g. building apartment in the semi-urban area or commercial building in sparsely populated area,” Sim said in a statement today on his views of the general economic status and property outlook for 2019.
The major obstacle remained the same as that of the last two years, where banks follow strictly to the Bank Negara guidelines on property lending. Since banks are very strict in End Financing of properties and this affects sales of houses.
“There is no adjustment or any relaxation by the new government on the lending guidelines, where banks are allowed to lend based on ‘proven income’, where there is no consideration on income growth where even though minimum wages are being reviewed upward or any consideration on the undeclared second income,” said Sim.
He argued that lending for properties should be considered as savings instead of spending. This is because in Malaysia, with the protections already in place, properties appreciate and not depreciate like machinery and other disposable goods.
Sim opined that banks should consider lending on staggered repayments. For example, in the first five years, the repayment is low and subsequent repayment will be on an ascending scale. In addition, the banks could also consider longer repayment period or even extend two generational loans to family housing loans.
“We hope Bank Negara will take note of the slowdown and will adjust their lending guidelines back to collateral lending so that the property industry can grow and contribute to the country’s economy and prosperity.”
Sim reckoned that the stamp duties waiver and incentives announced in the federal budget 2019 would come to nought if the purchasers cannot raise the end finance to complete the purchase.
“Even in this challenging time, our state government have approved a new scheme called Sri Pertiwi that allows private developers to build affordable houses at a selling price that is below RM280, 000 and with a minimum size of 900 sq ft floor area.
“This is a programme that helps to meet the M40 or middle-income housing demand. The state government allows the private developers to build up to 12 units per acre or a 50-unit apartment on an acre of land with facilities and amenities. The developers will be able to start to launch this type of development by end of 2019.”
On the state budget 2019, Sim said the increased budget for development expenditure would help the state’s economy to grow even though “the federal government have drastically reduced out development funds.
“The 5 per cent sales tax on petroleum-based products meant for export is a very commendable move by our state government to ensure our journey to become a developed nation will not be hindered.” — DayakDaily