Demand for residential properties in Penang is expected to remain steady during the second half of 2020, especially if the homes are from renowned developers with good quality products.

Knight Frank Malaysia executive director Mark Saw says there are pockets of success by some developers reporting bookings and sales for their affordable homes during the movement control order (MCO) period (from March 18 to May 3), despite the fact that physical viewings were disallowed.

“In this challenging environment, developers with a strong brand name and good delivery of quality products should still achieve decent returns and the gap between higher and lower quality properties will become more evident with better sales for those able to deliver.

“These factors will play a critical role in determining the success of developments. It has become a buyer’s market and many deals are being offered by developers to attract first-time buyers as opposed to investors who have been temporarily sidelined, ” he tells StarBizWeek.

Due to the Covid-19 pandemic, Saw says buyers’ preferences and timings may change, with decisions being put on hold due to job security, ample choices and rentals being more competitive.

CBRE|WTW director Peh Seng Yee says the pandemic’s impact has been softened in the second half of the year with the recovery MCO (which was implemented from June 10).

“As housing is a necessity and with the bank loan moratorium, the residential property sector has been cushioned from the worst impact.

“Hence, the residential market is expected to remain resilient for the second half of 2020. Significant growth is not expected yet as the issue of property overhang, lack of spending confidence by consumers and stringent lending policies by banks are expected to still linger for the remainder of the year.”

Additionally, both Saw and Peh agree that the reintroduction of the Home Ownership Campaign (HOC) was a much-needed boost to the local property market. The government reintroduced the HOC in June under the Short-Term Economic Recovery Plan (Penjana).

Peh says the HOC is expected to continue to spur the buying momentum for residential properties in Penang over the short term.

“Developers are experiencing a pick-up in bookings by buyers compared with the first half of 2020, which was mainly affected by the MCO.

“However, the encouraging bookings have yet to be fully translated into good actual sales, due largely to stringent lending policies by the bank and the challenges and uncertainty in the economy and job market.”

Saw also believes the HOC will be a short-term reprieve for the local property market.

“The HOC initiatives will only be a temporary measure. For the long term, developers should carry out proper feasibility studies to determine the marketability of their products before commencing developments and ending up with unsold units.”

According to Saw, the volume of residential transactions in Penang decreased 19.7% to 2,748 units in the first quarter of 2020 compared with 3,422 units in the fourth quarter of 2019.

“The value of transactions in the residential sub-sector during the first quarter (RM1.06bil) indicated a drop of 17.2% compared with RM1.28bil in the fourth quarter of last year, ” he says.

Under the HOC, stamp duty exemption will be provided on the transfer of property and loan agreement for the purchase of houses priced between RM300,000 and RM2.5mil.

Meanwhile, the exemption on the instrument of transfer under the HOC is limited to the first RM1mil of the home price, while full stamp-duty exemption is given on loan agreement effective for sales and purchase agreements signed between June 1 and May 31,2021.

The government has also announced real property gains tax (RGPT) exemption for Malaysians for the disposal of up to three properties between June 1,2020 and Dec 31,2021.

The HOC was kicked off in last January to address the overhang problem in the country. The campaign, which was initially intended for six months, was extended for a year.

It proved successful, generating total sales of RM23.2bil in 2019, surpassing the government’s initial target of RM17bil.

To clear RM2.6bil worth of 3,043 overhang units in the state, Knight Frank says the Penang local government, housing, town and country planning committee has announced that the state will reduce the minimum price threshold for foreign property ownership by up to 40% starting from June 11,2020.

“Ceiling prices for stratified properties on the island will be reduced by up to 20% from RM1mil to RM800,000 and on the mainland, from RM500,000 to RM400,000.”

Source: TheStar.com.my