However, a paper by Sunway University Business School Economics Professor, Professor Yeah Kim Leng titled ‘Economic Outlook for 2018 and Beyond’, was presented at the 27 th National Real Estate Convention and it gave a few reasons why we can smile again this year.
According to Yeah, things started looking relatively positive in 2017, when the country finally saw a strong and synchronised growth for the first time in a long period. The trend saw an upturn from 4.2% to 5.9% that year; coupled with the robust growth that experienced at the beginning of this year, and the numbers seem to suggest that we’ll be on an upward trajectory for 2018 at least.
Agriculture, manufacturing and services are just some of the main sectors that saw a positive increase, whereas the construction sector experienced a moderate growth. While growth in the real estate sector is also moderate, many are still seeing this as a sign of hope for the situation to improve in the years to come.
This means that the property you’ve had your eye on for some time may not be completely out of reach for long. Without further ado, let’s take a look at the four key factors that indicate it may be the right time to part with your cash!
1) Cyclical upturn to continue in 2018
Much of the uncertainty, imbalances and vulnerability have been removed, post-global financial crisis. In fact, after eight to nine years of this, the global economy has seen a good improvement for the first time. This suggests an expanding trend in the global market, and Malaysia will also see a positive outcome.
It is also expected for Malaysia’s GDP, supported by improving external demand, to enjoy a growth at the higher end of 5.5% - 6.0% range in 2018. However, it is important to note that while a strong financial system would mean a better capability to cope with volatile short-term capital flows, the same cannot be said of overcoming long-term structural challenges.
Some of these challenges include insufficiency of a highly-skilled workforce, industrial upgrading and productivity-led growth, all of which will require greater policy effectiveness. This is therefore something that Malaysia needs to look seriously into.
2) Inflation to taper off to long-term average
Another piece of good news for Malaysians: there’s a forecast that the inflation rate is reducing this year! The above trend Consumer Price Index (CPI) inflation of 3.7% in 2017 is projected to normalise till the range of 1.8% to 2.5% in 2018, as subsidy rationalisation and energy price shocks subside.
Some analysts are saying that we’re currently on a high, strong growth with low inflation, a ‘sweet spot’ in other words. Although the forecast says that inflation will reduce, the low household income levels remain vulnerable as this group is at high exposure to debt, even though its relative proportion has declined slightly.
3) Mixed outlook on real estate
In the property industry, construction activities continue to be driven by civil engineering works, particularly in large infrastructure and industrial projects, as well as selected property developments. Besides that, the property market is also continuing to cool off after a rough couple of years. The speculative demand has eased up but no major correction is expected as the economy remains healthy.
As for property prices and the demand for it, the next few years will see a moderately strong GDP growth and higher employment rates, thus contributing to an increase in income and an expansion in the working age population. On top of that, there will be a slower yet still-positive credit growth, underpinned by strong domestic liquidity and continuing credit flows as banks remain healthy.
4) Ringgit to strengthen but still undervalued
In terms of Malaysia’s currency, it hasn’t been at its strongest in recent years. It is, however, safe to say that it’s slowly strengthening and has emerged as one of the top performing currencies in the region. On the other hand, the Ringgit still remains as one of the most undervalued currency in ASEAN. In addition, foreign funds are likely to flow back to the local equity market once there is a clear indicator regarding this year’s election.
If you’re still on the fence about signing that sales and purchase agreement, worry less for the four points above paint an outlook on the Malaysian economy overall that is rosier than previous years’ doom and gloom. This article might just be the little extra nudge you need to finally proceed in procuring your dream home!
Are you interested to find out more about which property you should be looking at? Read on: Remarkable rental returns: 10 hottest projects in 2017
This article was repurposed from "4 reasons you should start saving to buy a property in 2018", first published on iProperty.com.my