The privatization of infrastructure projects and housing development contributed stronger growth in construction sector. Construction activity in the non-residential sector consolidated further due to large overhang of office and retail space. Measure has undertaken by government to support economic growth and increase disposable income led to a positive growth of the residential sector. Growth was supported by strong underlying demand for residential units, particularly affordable and conventional housing in choice locations with good accessibility. The low interest rate from financial institution offering competitive housing loan packages with longer tenure provided additional impetus.
Other incentive included withdrawals of Employee Provident Funds (KWSP) for the purchase of second house provided the first house has been sold and withdrawals for settling housing loans will be allowed once in every 3 years; Exemption from stamp duties for low-cost residential unit and lifting limitations for financial institutions to finance the residential properties price above RM250,000 inclusive shop houses by Bank Negara Malaysia.
The relaxation of the Foreign Investment Committee guidelines on foreign acquisition properties in Malaysia in April 2001 has helped to reduce the property overhang in the sub-sector. Beside that, Foreigners who meet the pensioner requirements under the “Silver Haired Programme” and “Malaysia My Second Homes Programme” are now allowed to reside in the country for life, they would be barred from working or starting a business, but they would be allowed to buy properties worth more than RM250,000.00.
Indicators of optimism of rising demand in the residential sector included increase in new approval of issuing Developer’s License, new approval of issuing Sale and Advertising Permits, and loan by the Treasury Housing Loans Division increased significantly due to higher loan eligibility for civil servants and the ability to utilize the balance of loan eligibility to purchase a second house.
Growth in the construction sector is expected to be sustained with impetus coming from the civil engineering and residential sectors. Low interest rate and various pre-emptive measure implemented by the Government to address the excess supply situation in the property market will continue to support demand for residential housing.
The outlook promising more transaction for affordably priced residential properties of RM250,000.00 and below not only dominated the sector but continued positive growth based on volume of transaction following an anticipated improvement in the country economy. |
