“However, we expect developers focus on residential projects located in urban states such as Johor, Kuala Lumpur, Selangor and Penang to face challenges,” Intenational rating agency Moody’s said in a report.
Since 2009, Malaysia (A3 positive) has seen a rapid rise in residential property prices.
Property market to moderate but large developers are resilient: Moody’s
KUALA LUMPUR: Intenational rating agency Moody’s says the property market will be dampened this year but large listed property developers are expected to be resilient.
Sales volumes are likely to moderate, but to remain supported by developers’ product offerings targeted at middle-income households and/or by contributions from their overseas projects.
“However, we expect developers focus on residential projects located in urban states such as Johor, Kuala Lumpur, Selangor and Penang to face challenges,” it said in a report.
Since 2009, Malaysia (A3 positive) has seen a rapid rise in residential property prices.
The extent of the price rises in Malaysia raises the question of how vulnerable the banking and corporate sectors are to a possible shift in sentiment and downturn in the property sector.
It said macroeconomic conditions in Malaysia have recently turned less positive for rising housing prices.
In particular, the economy faces headwinds related to the ongoing downturn in commodity prices and slowdown in China.
“Demand will also be dampened by previous regulatory measures aimed at cooling the market, the implementation of a 6.0 per cent goods and services tax due in April, and the pass through of tighter monetary policy in the US.”
“Despite these headwinds, our central scenario is for a soft landing in the Malaysian property market. Housing demand from middle income households will remain resilient.”
Moody’s expects Malaysia’s gross domestic product growth to decelerate to a still-solid 4.5 per cent to 5.0 per cent in 2015, from 5.8 per cent in 2014.
Delinquencies on mortgages and construction-related loans will likely increase from their current multi-year lows, the report added.
“Malaysian banks have robust capital buffers and healthy pre-provision profitability. ”
It added mortgages with high loan-to-value ratios and loans to overleveraged households and developers to be at risk of payment slippage.
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