Increasing domestic consumption and boosting confidence among buyers are key to stimulating the economy in the current year.

The Finance Ministry's Valuation and Property Services Department (VPSD) director-general Datuk Abdullah Talith Mohd Thani said "without these measures, the slowing trend becoming evident in the market will continue and take its toll".

Speaking at the Second Malaysian Property Summit 2009 held at the Sime Darby Convention Centre in Kuala Lumpur earlier this week, Abdullah Thalith cautioned that the economic indicators point towards a "worrying outlook" for 2009 � for the property sector and the economy as a whole.

"We must start depending less on the hope of foreign spending and stimulating more domestic spending... we have to depend on ourselves and be responsible for our own future."

Abdullah Thalith discerned a reducing trend from July to October last year, with transaction volumes dropping between 1.5 per cent and 4.3 per cent.

Association of Valuers & Property Consultants in Private Practice Malaysia (PEPS) president James Wong concurred, noting indicators suggest a more difficult year for the market.

"There will certainly be less launches this year and the full impact of the global financial crisis has not been felt (in the local market) yet."

He estimated that property prices and demand could weaken by five per cent to 10 per cent.

However, he said a plunge in property prices similar to what the country encountered in the 1997 Asian financial crisis is unlikely.

Meanwhile, former D-G of VPSD Datuk Mani Usilappan observed that residential property transactions were "getting sticky" and sales were not moving fast.

"Right now, it will be difficult to sell as many buyers are adopting a wait-and-see attitude... and by holding, buyers face no economic loss," Mani said.

In the next few months, though, he expects an increase in "forced" selling by those wanting to unlock cash to finance other expenses such as education or pay off debts.

The sellers could also mainly be "flippers" who originally bought for quick capital gains, he said, but now are forced to offload the property due to reduced demand in the market.

Mani also reminded industry players "not to view the property market as an island, but as an important part of the overall economy" and that the economy's performance is key to the outlook for real estate.

The Malaysian Property Summit is an annual event organised by PEPS to encourage the meeting of minds and greater dialogue among industry stakeholders.