KUCHING: Sarawak Housing and Real Estate Developers’ Association (SHEDA) Kuching chairman Sim Kiang Chiok foresees that housing prices in Sarawak will stabilise with a slight decrease to drive up interest after the lifting of the Movement Control Order (MCO).
He said there are various factors and past experiences to consider as the country’s economy affected by the Covid-19 pandemic and the MCO was quite different from those of the 1998 currency crisis and 2008 credit crisis.
“We know that the 1998 currency crisis was due our country’s banking and debts problems while the 2008 credit crisis was due to credit crunch where the major economic power-houses encountered banking problem.
“Our banks are in a stronger position than before. The Covid-19 pandemic has caused the world to shut down and having to restart after the major spread of the virus is over,” he said in a press statement today.
“To understand the pricing of properties and in particularly housing, we can look at various factors but the most most fundamental factors are the supply, demand, bank financing, location, type of properties for different income segments.
“Property markets had been poor during previous few years before the MCO and presently prices of properties have already adjusted downward with the Home Ownership Campaign (HOC) and very stringent bank financing for property by Bank Negara rules.
“Our overhang properties in Sarawak is stable and new launches are also low.
“In view of the above and with this pandemic and after the MCO is slowly being lifted, we know that with the six-month bank moratorium, three-months wages subsidies will help cash flow of the supply (developer), keep jobs (demand) so I foresee that the price will stabilise with slight decrease to drive up interest,” added Sim, adding that this was also subject to the banks’ appetite to give end-financing during this moratorium period
Sim added that after the six-month moratorium period the price of properties will depend on how well the country’s economy restart itself and how few jobs are lost and new ones created due to the pandemic.
“If the loan defaults are low and not many forced sales after the six-month moratorium, property prices will be stable and with low discounts. If our economy is able to restart and resume quickly to the previous momentum, we can see that our businesses and incomes might not be adversely affected after the 12 months when the MCO is lifted,” he said.
However, Sim felt that every sector must play its part to ensure the government’s stimulus packages are being implemented as quickly as possible and all pump prime economic activities will take off too.
Banks must be able to quickly assist Bank Negera and the government to reduce the very high standard of evaluation of giving out loans so that the much needed micro, special relief loan to the SME can be released quickly to them.
This would ensure businesses can still operate and continue to provide the employment in the shortest period.
“However, if our MCO and the other major world economics lockdown have to be dragged on for a longer period, our government will have to further adjust their stimulus packages to cater the longer shut down period and may have to extend the moratorium, wage subsidies and cash handouts or else there will not be sufficient time for the economy to restart and regain its momentum,” Sim pointed out.
“So, the prices of houses in Sarawak will depend on how well we execute our Exit Plan after the lifting of MCO and how fast our economy can be revived till the end of bank loan moratorium which ends in September 2020,” he said.
Source: Borneo Post