He advises prospective buyers to wait until property prices come down.
Ernest Cheong, who has been a chartered property surveyor and consultant for more than 40 years, said the property market does not exist in isolation and people needed to pay attention to the local and global economic situation.
He advised the public to shed the widespread belief that only house ownership could guarantee a roof over a family’s head. Families could still live in rented homes, he said.
“To make matters worse,” he told FMT, “you have so-called property gurus encouraging families to buy homes they may not be able to pay for in the long run, claiming it is an investment since property prices don’t go down.
“What happens when you can’t afford to pay the instalments and can’t sell the property off, or if rental values can’t cover instalments? You’ll be stuck.”
Cheong was commenting on the result of a recent survey by PropertyGuru.com.my, which said about 58% of Malaysian buyers were likely to make their purchases within the first six months of this year despite sluggishness in the property sector.
He said it would be more sensible to rent a house than to buy one in times of economic uncertainty.
“When you rent, you have flexibility,” he said. “Say you rent a house for RM2,000 and you lose your job or your wife loses hers, you can move to a cheaper place. But you can’t do this if you are servicing a housing loan at the rate of RM2,000 a month.
“Sure, you could rent out the house you bought and rent a cheaper place to live in, but the question is whether you can find someone to rent your place for RM2,000 or whether you can rent it out at such a rate when we have an oversupply of houses, like we do at the moment.”
Cheong suggested that prospective buyers make their purchases only if they were confident they could service their housing loans for the entire loan period.
“The monthly repayment for a home should not exceed 25% of a family’s net household salaried income,” he said. “The other 75% should be reserved for living expenses and, if possible, savings.
“People must remember that the tenure for a typical housing loan would be 30 years. During those 30 years, the cost of living will go up, while salaries may not rise in tandem.”
He said housing developers and marketing agents did not appear to want to drop their prices despite the current market glut.
He noted that rental rates were dropping due to oversupply and urged the public to take advantage of the situation.
Last year, it was reported that developers had not been able to sell 18,908 of the 81,894 units of residential and commercial properties launched in the first quarter of 2016. The unsold units were valued at RM9.4 billion.