KUALA LUMPUR (Bernama) – The property sector outlook remains challenging and is likely to see a lull in demand post-Goods and Services Tax (GST) implementation that could last for six to nine months, due to affordability issues and subdued buyer sentiment.
Maybank Investment Bank Research (Maybank IB) said developers were in the final push for sales before the implementation of the six per cent GST in April 2015 by bringing forward their property launches and are now offering very attractive marketing packages.
“We think the pre-GST theme is overplayed especially when banks have significantly tightened their criteria for mortgage financing,” the research house said in a note.
It said housing affordability remained an issue as the index has been trending down since 2009, mainly driven by the hikes in the base lending rate to 6.85 per cent from 5.60 per cent from 2009 to 2011. It said assuming a six per cent increase in property prices and no change in the overnight policy rate over the next 12 months, the housing affordability index could decline by a further 2.4 per cent.
This would impact investment decisions for new purchases and could further dampen property sales.