The uncertainties over the world economic prospects have started to take a toll on the local property market.Transactions have been slowing down in the past three months compared with a year ago, in addition to stricter requirements for mortgage applications. Glomac Bhd group managing director and CEO Datuk FD Iskandar said the external challenges would put pressure on the property sector. The extra requirement for the financing of property purchase also dampened demand, he added.

"There have been more measures required by the banks in terms of lower loan to value ratio (LVR) and other aspects where they are now calculating the eligibility for loans based on net income instead of the gross domestic household income of potential purchasers. So coupled with these, the US high unemployment rate and the financial meltdown in Europe, there would definitely be a slight slowdown," he said on the sidelines of the 14th National Housing and Property Summit on Wednesday, Sept 14.

Iskandar said the property sector would continue as one of the mainstay sectors to drive the country's economic growth.

He said the foreign capital outflow would have affected demand for high-end properties. He suggested that the government promote the Klang Valley for real estate investment in the region to increase Malaysia's attractiveness to foreign investors.

"We should somehow focus and make Malaysia, or Greater KL, as a real estate investment point; that's what I think we should do. We are going out and telling foreigners how great our country is, which is fine, but at the end of the day we forget to tell them that our property is good, the quality is good, design is good, it's very affordable, and we have some of the most lenient property laws in the world for foreigners to purchase property, it's so easy."

Despite the slowdown in the overall market for the past few months, there are sub-sectors in the property market which are still vibrant and attracting a lot of queries. This is especially in the affordable housing range between RM200,000 and RM550,000, according to Datuk Eddy Chen, group managing director of MKH Bhd and chairman of Real Estate and Housing Developers' Association (Rehda) Institute.

Chen said the local property market still has room to grow as the average units built every year do not exceed what the market can absorb. He said annually about 150,000 units are built and the market can absorb between 170,000 and 180,000 units.