Will a slowdown in China's property sector affect Malaysia's property market

Rising mortgage defaults hit developers

The Star newspaper has a recent article, “‘Hopeless’: Chinese homebuyers run out of patience with developers” about Chinese homebuyers who have given up hope their apartments will be delivered on schedule by their cash strapped developers. They have boycotted paying loan installments on properties bought but not delivered. The woes of Chinese home buyers of course highlights the dangers of buying New Project Properties aka off plan properties from property developers without a track record and strong financials.

According to the Economist, "the true significance of the boycotts lies elsewhere. They show that Chinese households no longer believe that a flat bought in advance will necessarily be delivered. This loss of faith is not confined to the protesters. It is also showing up in weakening pre-sales, especially for distressed developers. A reluctance to buy new homes poses a bigger threat to China’s economy than the more conspicuous refusal to repay existing mortgages. Weak sales will further squeeze the revenues of developers, adding to construction delays and deepening disillusionment". Source : “China’s mortgage boycotts are a symptom of a broader crisis”

In Malaysia what redress do homebuyers have if the property developer walks away ? According to a leading property portal, that depends on several factors. See "Your Property Developer Abandons The Project: What Can Be Done?"

In a previous post, "Marketing Serviced Residences Part 2/2" @ 360 KLCC I suggested first time home buyers should check out the financial record of the developers of off plan properties or New Projects properties. If the developer is not a listed company with easily obtained financial statements, FTHBs should ask for a CTOS credit report. See figure below.

See my posts on various topics @ 360 KLCC:

"Property USPs" - a guide on how to identify any property's unique selling propositions using a Penang high end seafront property as a case study:

"FTHBs should buy New Projects OR Sub-Sale Properties?"

See also Ikhram Merican's well thought out guide to buying off plan properties, "5 Things that can go wrong when buying a house from a developer & how to avoid them"

#propertyinvestment #ikhrammerican #OffPlanProperties #NewProjectsProperties #propertyforsale #realestatemalaysia