KUALA LUMPUR (Feb 17): Australia’s property tightening policy could weigh on transactions over the mid-to-longer term, and Malaysian developers present Down Under could be hurt if homes get increasingly unaffordable, CIMB Securities flagged.
The ban on foreign investors from buying established or existing houses for two years will eliminate a vital source of demand, potentially triggering a “negative ripple effect” across the broader property upgrading cycle, the research house said in a note to clients.
For now, however, “we do not expect the property tightening policy to have a material, near-term impact on ongoing and future launches by Malaysian developers with a presence in Australia” as the ban only applies to foreign purchases of existing homes, CIMB Securities said.
Property developers with exposure to Australia include UEM Sunrise Bhd (KL:UEMS), which is developing the Subiaco Oval project in Perth with a gross development value of RM1.4 billion, and SP Setia Bhd (KL:SPSETIA) that launched the RM2.8 billion Atlas Melbourne in Victoria in October 2024.
Among construction firms with property exposure Down Under, Malaysian Resources Corporation Bhd (KL:MRCB) is selling units in 26 Vista @ Gold Coast and 1060 Carnegie in Melbourne while Gamuda (KL:GAMUDA) is developing The Canopy on Normanby and Fareham in St Kilda.
Australia’s government announced the policy over the weekend as part of an election campaign to rein in surging home prices. The ban takes effect from Apr 1, 2025 until Mar 31, 2027, before a review to determine if the policy should be extended beyond this timeframe.
The policy may instead “prompt a shift in foreign buying interest towards primary property market offerings in Australia,” CIMB Securities said.
Australian properties are some of the most unaffordable in the world, with only 10% of the housing market considered “genuinely affordable” for median income families, according to the Housing Affordability Report released in November 2024 by the Australia & New Zealand Banking Group and CoreLogic.
“Demand for housing has softened in recent months, with high interest rates, cost of living pressures and elevated home values deterring buyer competition,” the report noted. “In some markets, this has contributed to value falls.”