Slowdown in Property Market

Thursday, September 20, 2012

According to Malaysian Institute of Estate agents, the property transaction for the first half of 2012 showed a trend of slowing down. Until today, there was no sign of the reversal in the slowing down trend and it is expected that the trend will continue until 2013.

The blames was put on the exorbitant price, stringent banking rules and the general cautious sentiment.
The explanation for the trend are as follows:

- The asking price is too high. In 2010 and 2011, the residential properties saw an increase of about 30%, a figure which was too high and if left uncheck, it was going to burst the bubble. Various measures were taken and the trend starts to plateau.

- There was no meeting of mind between the seller and the buyers. The gap is rather too high thus preventing the closing of the deals.

- There was disparity between the asking price and the evaluated price. Take for example, a house with the asking  price of RM1 million, and the evaluated price is only RM800,000/ With that value, the bank loan is probably only RM700 thousand.

- The banking sectors had revised the way to calculate the eligible amount, it is no longer based on gross income. The calculation is made based on net income.

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