Uncertainty of Virus Containment
Containing the spread of the new highly contagious Covid-19 virus remains a huge challenge.
While the government and the people are doing their parts to help curb the spread, there will be no light at the end of the tunnel until effective vaccines are created.
Gloomy Economic Outlook
While controlling the virus is now top of the agenda, there are still many risk factors clouding the scene, such as depressed oil prices, ongoing tensions between the US and China, and domestic political turbulence, just to name a few.
Cautious Spending
People tend to hold back on large ticket purchases amid worries of losing jobs and income. The cautious attitude will only be lifted after more clear signals on market recovery appear.
Existing Overhang Unsolved
Even before Covid-19 reared its head, the Malaysian property market was already in a prolonged slowdown. Property transaction volume and value declined from 2015 to 2017, before a marginal increase in 2018. Adding to the slowdown is the issue of property overhang.
According to data from the National Property Information Centre, there were 31,092 overhang residential units worth RM18.77 billion as at 3Q2019 compared with 10,897 units worth RM4.92 billion in 2015.
Strict Lending Policy
Bank Negara has cut overnight policy rate to 2.5% early March 2020, the lowest since May 2010, which will likely affect banks’ net interest margin. Furthermore, non-performing loans are expected even with the central bank’s six-month moratorium on loans.
Hence, banks may become even more selective with lending.
