The weak performance of the property market will continue until next year as high prices continue to deter buyers, according to Siva Shanker, Deputy President at Malaysian Institute of Estate Agents (MIEA).
"Asking prices are too high. The buying frenzy is over. In 2010 and 2011, some residential sectors saw an increase of about 30 percent, which is way too high and moving towards a bubble. This trend has somewhat plateaued," said Siva.
"What's happening now is there is no meeting of minds between the asking and the accepting price. The gap is just too wide and there are fewer transactions taking place," he added.
Additionally, the disparity between the asking price and the actual price of a property leads to the abortion of the sale, with funding as a major problem.
"For example, the asking price of a property is RM1 million but the valuation amount might only be RM800,000. There's a shortfall of RM200,000 and banks lend you money based on either the selling price or the valuation price whichever is the lower."
"So if the valuation price is RM800,000 and you're eligible for a 70 percent loan based on that amount, you get a sum of around RM560,000. This means the buyer is going to have to top up RM460,000 on his own!"
Meanwhile, Siva noted that the responsible lending guidelines of Bank Negara, which has been implemented this year, also created an impact on Malaysia's property market.
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