1. THE NATURE OF THE PROPERTY MARKET AND
DEVELOPMENT IN MALAYSIA
Discuss the nature of the property market in Malaysia
The nature of the property
market and development will have some implications to the market research.
Naturally, understanding the impacts of these natures will help property
consultants to input useful information into project analysis. (Kamarudin, et al.,
The overall property price
is affected by supply and demand in the property market. The increase in
population and the economic growth of an area will generate the demand for
property market. The demands for a property are usually increases from the high
employment rate, low Overnight Policy Rate (OPR), as well as safety and
security of the developed area. Currently, the high liquidity in the financial
system and low interest rates charged has encouraged the citizens to borrow
from the financial sector to purchase properties which is mainly residential
houses and cars.
Since 2008, the household in Malaysia with the ratio of debt payments to
disposable personal income jumped to 47.8% which is RM581.3 billion in 2010.
Bank played major roles in financing the property investment.
of location is the first characteristics of the property market in Malaysia.
The strategic location which includes a well-developed infrastructure, commercial
property, education will surely increase the demand for the property and thus
will increase the price of the property. A consultant must ensure that the
given development have the potential to have high return from the investment
input. A property development which is sited on a good location has the
advantages of minimizes the time travelled and thus reduces fuel consumption
which directly reduce the transportation fees and hazards to the surroundings. Property
development has attracted attentions on many fields or arenas. It is often
considered as a domain for remote protagonists for ambitious and inappropriate
forms of construction (Drane, 2013).
Malaysia, the high-end residential properties are highly impacted due to it is
not affordable by most Malaysians especially the younger generation who just
started working in the industry for few years. Therefore, the developers aimed
at developing the property within the affordable range of the youngster which
is below RM500, 000.00. The demand for property above RM500,000.00 are mostly
from the high income household, foreigners from Singapore, China, United
Kingdom, etc who wishes to have a villa in Malaysia. The monthly instalment for
the property is preferably not exceeding 30% of the household income. If over
committing in the repayment, it is very easy to get into financial trouble such
stability of the property is also the nature of the property. A careful
investigation can give some thread to the proposed project while the prospect
of appreciation in value is beyond the control of any property developers. A
market research is important and should be implemented by the marketing
department. Brief information on initial cost, growth in selling price of the
property, types of ownership, length of holding period, and rental income is
essential should be taken into consideration during the feasibility study.
the property market is higher value than other consumer goods, normally people
need to do lots of investigation and research when making the decision to purchase
a property, so it is not easy to promote these product. Property marketing is a
challenging task to the developer as it is not easy to secure the demand.
Demand variance is often caused by inappropriate pricing, resulting in the
creation of unaffordable products for the perspective buyers. Product price is
one of the prospective causes for marketing breakdown for the project.
Nevertheless, experience has shown that properties sold within affordable range
of prices are easier to sell and have better chances of securing demand. This
does mean that property products should always be sold at lower price.
property gain tax (RPGT) is also an issue as it imposed a huge amount of tax
payment. The RGPT is increased by 5% in budget 2013 to control the speculation
as it only imposed to the individuals who sold out the property and is charged
on a percentage basis of the profit earned. As of 2014, an amended RPGT is
announced during the budget 2014 as follow:
1.1 shows the RPGT 2014
that, the recent Klang Valley MRT project will increase the penetration rate
for public transport. The development in infrastructure encourages the
surrounding property value to increase tremendously. According to the research conducted
the property price hike up 5%-10% mainly for the resale and rental market. This
will encourage the developers to have new residential project to sustain the
demand of people. Most house hunters may want to seek at residential houses
located within 1km radius from the MRT station hence it is a good idea to
construct a high-rise residential project such as service apartment and
Figure 1.2 shows the MRT