A hike in interest rates is not likely to be a dampener to the housing market as people do realise that properties are a good way to hedge and stay ahead of inflationary pressures, President of REHDA Malaysia Datuk NK Tong told Business Today.
He said although the interest rate dampens consumer buying, this is more than offset today by the opening of the economy as mentioned previously. “Therefore, the outlook remains positive given the current circumstances,” he said
He said that REHDA will continue to encourage its members to focus on nation-building efforts to deliver an affordable quality home to the rakyat as people do realise that properties are a good way to hedge themselves against price increases
The question uppermost in the minds of property developers and consultants is whether the property market particularly the affordable segment would look attractive if the OPR continues to rise.
However, Group Managing Director of Savills (Malaysia) Sdn Bhd Datuk Sri Paul Khong Told Business Today that it is going to be a concern to the housing market if the OPR continues its upward climb every quarter into 2022 and 2023. “The housing market needs a better cushion on the increases from both the construction costs and interest rates angles,” he said
Khong said that in the medium term, capital values will be further pressured northwards naturally for the housing market to reach its equilibrium point once again. “Any upwards review especially on a quarterly or regular basis on the OPR rates @ 25 BPS each jump will have an increasingly negative and inverse impact on the housing sector,” Khong said
On the property outlook for the 2H, Tong said that the outlook for the property market continues to improve. In our previous half-yearly survey REHDA Property Industry Survey 2H 2021 and Market Outlook for 2022, members were optimistic about the 1H 2022 outlook, and even more optimistic for 2H 2022.
He said that this makes sense because people are starting to put the pandemic behind them. “With that greater certainty, they become more confident in investing for the long term into properties,” he said.
So far, he said that it can see more positive moods expressed in crowded restaurants, busy malls, and full airline flights.
“Properties are a bigger commitment, so that optimism to spend may lag a while. Hence, the optimism that we see now on the streets will probably express itself in property sales towards the second half of 2022 and beyond,” Tong said.
Agrees Khong who said the outlook into 2H 2022 is relatively better as the general sentiment on the ground has improved with the reopening of all businesses after lockdowns in Q3 2021 and also the reopening of the international borders on 1st April 2022.
He said that although the property market has not moved substantially in recent months but is facing a strong cost-push in all new products due to the substantial increases in petrol prices (from the Ukraine War) and the various construction materials ranging from steel bars to sand.
On the possible impact on the banking sector on account of customers defaulting on loan repayments, a banking analyst said that the impact has been buffered and would have a minimal impact on the banking sector.
