Singaporeans should purchase homes in Johor’s Iskandar region only if they intend to occupy them since gains from real estate flipping will be hard to achieve, revealed property consultants quoted in the media.
The Iskandar housing market has been dominated by speculators in the last few years, but the surge in supply has resulted in a slowdown since mid-2014.
“In 2012 and 2013, it was a free-for-all and speculation was rife. Even Singaporeans were coming in, buying blindly, and that encouraged developers to launch bigger numbers of units,” said PA International Property Consultants executive director V. Sivadas.
But transactions have moderated since the Malaysian government rolled out property cooling measures and stricter bank lending rules.
The fierce competition among property firms has also raised the risk of first-time developers abandoning their projects, Sivadas noted.
The high-rise residential market is particularly risky as oversupply looms largest in that segment.
On Monday, Monetary Authority of Singapore (MAS) board member Lawrence Wong expressed concern over the 335,838 private homes in the pipeline in Iskandar, which is more than the overall number of private units in Singapore.
Tan Ka Leong, director of property consultant WTW Johor Baru, said oversupply may be a real threat in the state of Johor over the next two to three years.
As such, consultants are advising investors to only shop for property in Iskandar if their pockets are deep enough to withstand a down market.