PETALING JAYA (April 17): Whether property developers will lower the prices of their products in light of the current economic downturn brought on by the Covid-19 pandemic would depend on how desperate the developer is, but one thing is certain prices will definitely come down, said Datuk Soam Heng Choon, Real Estate and Housing Developers’ Association (Rehda) president.
On the other hand, many developers have strong unbilled sales to tide them over for at least another year or two, Soam said during EdgeProp.my’s Facebook Live Fireside Chat titled “Will the Malaysian property sector survive this mother of all crises?” held today.
“Those with large unbilled sales may feel the cash flow constraints much later maybe 1.5 years later,” he said, adding that the National Home Ownership Campaign (HOC) last year had helped strengthen the cashflow situation today for many developers.
Chen: Price fall might come from the secondary market as the sellers might have weaker cash flow.
Nevertheless, Soam believes that property prices in general will drop although it would be difficult to put a figure on the quantum. “How big a drop depends on supply and demand; the property type; the location and other factors,” he offered.
He added that the secondary market will not see a surge in fire sales, if any, for at least six months thanks to the loan moratorium offered by Bank Negara. “But things are uncertain after the moratorium period,” he said.
Also taking part in the session was Tan Sri Eddy Chen, MKH Bhd managing director and 1Malaysia People's Housing Programme (PR1MA) chairman who said this could be an opportunity to reduce the overhang in the property market, as developers would not be so resistant to lower their property prices this time round.
“If you are looking at cash flow and survival, then you may be probably less resistant to lowering prices,” he said, adding that in the 1997/1998 Asian Financial Crisis, some developers had to reduce their prices by as much as 30% to 40%.
