The year ended on yet another gloomy note for the Malaysian property market as both the residential and commercial segments saw an extension of the downward purchasing momentum from 2015.
Past President of the Malaysian Institute of Estate Agents (MIEA) Siva Shanker opined that the property market had reached the bottom of its cycle in 2016 after being in a slowdown mode since 2012.
"In 2013, we saw the number of transactions fall, but with the value still going up. In 2014, we saw a slight increase in value, but unfortunately, the improvement did not carry through to 2015.
"In my opinion, the property market will end the year on a weak note," he told Bernama.
As property is a long-term investment, people who get caught in the cycle are the ones trying to be short-term investors or also labelled as "property-flippers".
A key reason for the lower purchasing activity in the industry is the difficulty in obtaining housing loans from financial institutions.
As revealed by the National Property Information Centre (NAPIC) in its Property Market Report for the first half of 2016, the ratio of loan approvals against applications shrunk to a low 40 per cent.
It was also the lowest recorded in a six-year period.
Property buyers seemed to be burdened by the rising prices of residential and commercial buildings against the background of a weaker economy.
It was noted that the Malaysian House Price Index continued to improve moderately in the second quarter of 2016 at 235.4 points, up 5.3 per cent.
The same goes for commercial buildings, whereby prices of shop lots continued to strengthen in areas with hype commercial activities and efficient connectivity, in ranging between RM1.2 million and RM2 million for a double-storey unit, depending on locality.
This situation has resulted in a huge property overhang for the year, especially in the residential segment.
According to NAPIC, the residential property overhang grew to 13,438 units worth RM7.59 billion in the first half of 2016, up by 30.7 and 51.3 per cent in volume and value respectively, as compared to the same period in 2015.
"On a similar trend, the unsold under-construction and not constructed property grew to 56,170 units and 14,039 units respectively, up by 13.3 and 74.8 per cent.
"Condominiums/apartments formed the bulk of the unsold in both categories," it said.
Meanwhile, prices continued to go up as most developers adopted a wait-and-see stance, holding off most of the upcoming projects, to keep supply from further exceeding demand.
The NAPIC report noted a decline in completion of property projects by 41.1 per cent to 24,717 units from 41,988 units in the first half of 2016.
Construction starts also depicted a similar downward pattern to register 60,378 units, down by 16.8 per cent from the first half of last year, while new planned supply dropped by 31.9 per cent.
According to various news reports, residential properties priced at RM500,000 and above are only within the reach of households earning at least RM15,000 per month.
This accounted for only six per cent of the Malaysian population.
Despite a house with a price tag of RM500,000 being considered as "affordable" by developers due to the rising cost of land and building materials, middle income buyers can only afford those priced around RM250,000 and below.
In this situation, several affordable housing schemes such as 1Malaysia People's Housing Programme (PR1MA), Rumah Mampu Milik Wilayah Persekutuan (RUMAWIP) and Rumah Selangorku, continued to help middle-income families in the Klang Valley to own a house.
With a price range of between RM100,000 and RM400,000, these housing schemes seemed to top the search list for young families and first-time house buyers.
Amid the slower performance in the purchasing segment, the rental market has shown encouraging signs. More people are opting to rent a property due to the inability to purchase.
Based on the property cycle, the rental market remained strong for the year, especially in the Klang Valley.
Moving to 2017, Siva said there are a few rapidly emerging trends which need to be accepted by buyers.
"People are starting to accept that they have to live further away from the city centre as property prices become more expensive.
"We now have good infrastructure such as inter-city train services and highways. Property development for now will follow the progress of infrastructure," he said, adding, an integrated development was also becoming very popular.
After about three to four bad years in the property market, Siva said 2017 could see the market level up before regaining some confidence in 2018-2019 and start moving back into positive territory.
"There are going to be some non-performing loans. But in my opinion, it will be normal, as I believe most people who bought properties, can hold on to it," he said.