No surprises in property report
PROPERTY experts say the findings of the Property Market Report 2013, released last week by the National Property Information Centre, came as no surprise, with the various cooling measures having their intended effect of curbing speculation and excessive price growth.
Less certain is whether demand will recover in earnest during the second half of this year, in what some expect to be a “pre-GST boom”.
CEO-Agency of property consultancy PPC International Sdn Bhd Siva Shanker tells StarBizWeek that he sees buyers making a beeline to snap up property in the two quarters prior to April 2015, when the GST takes effect at an initial rate of 6%.
Shanker, who is also president of the Malaysian Institute of Estate Agents, does not believe Malaysia will follow the example of Australia, where prices soared and then tumbled pre- and post-GST back in 2000.
“In Malaysia, what goes up does not come down. I think our property prices will rise ahead of GST and find their level there,” he says.
According to the Property Market Report 2013, volumes shrank 10.9% to 381,130 transactions but their value rose a marginal 6.7% to RM152.37bil from RM142.84bil in 2012, indicating that prices gained strength despite a raft of measures designed to rein in speculation, including a ban on interest-bearing schemes and a higher real property gains tax.
“Most people say 2014 and 2015 will be tough years for the property market. A slowdown usually lasts for two years.
“But looking at the report, my view is that 2013 and 2014 are the slowdown years. I expect the market to normalise in 2015 and make a full recovery in 2016 and 2017,” Shanker remarks.
“This year’s volumes will probably be flat, but prices are not likely to go down.”
As in the past, the report showed that the residential market dominated close to two-thirds of all transactions.
Approvals for housing loans, however, fell sharply compared with an expansion the year before. Total loans disbursed for the purchase of residential properties rose to RM74.4bil from RM64.1bil.
The report says construction activity stayed solid, backed by high-rise and high-end properties in the Klang Valley, Penang and Johor. The shop and industrial segments also saw higher starts and building plan approvals in 2013.
The occupancy rate for retail and office space remained firm, buoyed by a moderate increase in new supply, as well as fewer starts and new planned supply.
But the market showed evidence of softening across the board. All sectors posted reductions in transaction activity, led by commercial and industrial properties.
Most states fared worse save for Johor and Perlis, which recorded high single-digit improvements.
Five states experienced double-digit contraction in activity, with Putrajaya, KL and Kelantan topping the list.
According to the report, residential properties saw improved sales of new launches and more housing starts and completions, which helped pare down the number of “overhang” properties.
The all house price index jumped to 192.9 points against 172.8 points the year before. Average prices rose 10% to RM266,304 from RM241,591.
In terms of volume, most states posted a downturn except for Johor, which expanded 16.6%.
In value terms, all major states saw growth except for Kuala Lumpur, which declined by 9.7%. Johor was most improved with 63.2% growth, while Selangor recorded 2.8% growth and Pulau Pinang, zero growth.
Houses priced between RM250,000 and RM500,000 were the most popular, capturing 27.3% of all transactions, while demand for those in the low-cost RM100,000-RM200,000 category weakened.
Terraced houses made up the largest share of residential transactions, with Selangor, Johor and Perak contributing to more than half of the market share, followed by condominium and apartment units, most of them being transactions in Selangor and Kuala Lumpur.
The number of new launches fell last year after three straight years of growth to 48,290 units from 57,162 units in 2012, even as their take-up receded to 45.1% against 47.7%.
Kuala Lumpur, Selangor and Perak topped the list of new launches, commanding 57.4% of the national total.
From a price standpoint, the Kuala Lumpur market continued to be resilient. The report reveals that single-storey terraced homes at Bukit Bandaraya and Lucky Garden, both in Bangsar, saw 25.3% and 11.4% growth, respectively, pushing the value of a unit to upwards of RM1mil.
Spurred by the MRT factor, homes in Taman Bukit Anggerik and Salak South Garden posted 17.2% and 17.8% growth, while double-storey terraced units in Kepong’s Desa Park City ranged between RM1.31mil and RM2.48mil.
The report highlights that select condominiums in Kuala Lumpur, such as Bangsar Puteri, OBD Garden Tower and Casa Vista experienced growth of over 20%.
A downtrend was seen in Mont’Kiara Damai and Tijani 2, however, as prices tumbled by 5.7% and 12.4%, respectively.
Home prices also stayed firm in Selangor, but Johor’s landed residential segment jumped by double-digits in certain areas, particularly Johor Baru.
Condominium pricing in Johor Baru remained competitive, with the highest transacted price being RM500,000 per unit in Taman Pelangi. On average, units were priced between RM150,000 and RM350,000.
Up north in Pulau Pinang, residential properties were stable as the limited number of terraced houses on the island boosted demand for the Timur Laut and Barat Daya districts.
While Iskandar Malaysia was clearly a boon for Johor, CH Williams, Talhar & Wong managing director Foo Gee Jen says he is concerned if that performance is sustainable.
The veteran property consultant also expects a pre-GST rush for property.
“Buyers are concerned that prices will go up. If you are looking at a piece of property, now is the time to lock in your purchase,” he quips.
In Foo’s estimation, residential property could experience an 8%-10% jump in price after GST, and the landed segment a stronger 10%-15%.
“There is no oversupply in landed homes, but I can’t say the same for condominiums, especially the Soho (small office home office) or Sovo (small office versatile office) types.”
Kim Realty CEO Vincent Ng tells StarBizWeek that demand in the primary market remains firm and will likely continue apace unless interest rates go up.
“The primary market may gain traction in the second half as developers have been holding back on launches. Those with unsold stock will want to unload them before GST,” he points out.
“I don’t think prices will be cut drastically, but developers will make it attractive for buyers.”
Nonetheless, Ng acknowledges that the banks have tightened the screws on mortgages, leading to a mass of loan rejections.
“From what I understand, 30%-50% of the people who have put in deposits have had their loan applications denied for various reasons,” says Ng.
“The damage has already been done. More cooling measures will kill the market,” says another property agent.
Source: StarProperty.my
now i realized msian are really rich, housing price already extreme high also selling well
“CEO-Agency of property consultancy PPC International Sdn Bhd Siva Shanker tells StarBizWeek that he sees buyers making a beeline to snap up property in the two quarters prior to April 2015, when the GST takes effect at an initial rate of 6%.”
Why need to make beeline to snap up property when GST is exempted for residential property???
Kindly reassure that there is no oversupply, the capital gain is still healthy in next few years, please buy more, it is now time to lock in your purchase.
…..“Buyers are concerned that prices will go up. If you are looking at a piece of property, now is the time to lock in your purchase,” he quips……
To effectively control price, addressing consumer psychology is very important, so that people don’t rush in unneccaserilly to buy homes that they don’t need yet.
A tougher regulatory control should be introduced to effect a downward price trend, so that the vicious psychology cycle of “prices will go up” can be broken.
@KiongKan
I agreed and like your comment.
Why need to make beeline to snap up property when GST is exempted for residential property???
@Lee
The materials used, all got GST. Like the toilet bowl, got GST.
@ezalor
If the toilet bowl is for residential purposes, they cannot charge you GST. You can lodge a complain to ministry of consumer if your supplier raise price for GST.
How about worker living expense and transportation expense after government implement GST? Will it not impact?
@Sure Up
You ask your boss loh, see if he is giving you a big raise right after GST implementation…..:)
@contractor
You are as stupid as an ass…. just shut up okay!!
@James
Haha…:D…Why? You’re a toilet bowl salesman is it?…..Hahahahaha…….!!
With GST, price for new launch property will increase. It is chain effect which very hard to avoid. The question is how much is the increase due to GST only.
Shouldn’t the GST effect on raw mat already priced in now since we are talking about 3 years construction period… I am puzzled why house prices will only increase after GST implementation according to those housing experts… I am not sure which developer will pay off all the material cost before they even start construction..
@lee
What you say makes a lot of sense.
@tikus
Developers will predictably say that their margin is very low now because they absorb the raw mat GST for their going projects… comes April next year, they can’t absorb the cost increase anymore but to pass on the cost to buyers… bla bla bla…:)
When demand is weak, no reason for them to increase price… no need to tell us those margin bs….
@Siaolang
One of the other main factors for property price increase is land cost.
As far as I can see, our state gov has done a lousy job in making sure there is no land hoarding. Big Bursa listed property companies should not be welcomed to build in Penang as they would normally buy up lots of land for future developments, causing unneccesary price hike.
I hope the state gov can do a better job in Batu Kawan in terms of controlling land price, since the state owns huge tracks of land there. When the state can successfully control land price, the can also control the price developers are selling to end users. Then, you won’t be hearing the developers saying ……”the reason we have to sell expensive is because land is expensive…….”. We shall see how our state performs.
Let’s cool down.
10% discount is not the end of story. There is still a future chance to appeal.
I always asked my friends there (and in fact many of the FTZ folks) are you a voter in this Bayan Lepas area? I am sure majority are not.
Or at least are you a Penang voter? I don’t ask you to be a traitor to your hometown but as you can see the problem right here affect your life.
Political means could be one of the better bargaining power. Think about it!
You can start go to update your NRD and voting centre NOW….before next GE!
Another excuse to increase the price? Are you saying as long as developer get their land cheap, they will sell the house cheap too?
GST, land price, labor cost… I find cost based pricing is always not convincing… looks very desperate to drum up the demand…
Siaolang,
The state gov has to ask itself one very basic question, DO WE WANT TO CONTROL HOME PRICE? Once that fundamental decision is made, and if the answer to that is YES, then there are many ways to achieve that, especially for a place like Batu Kawan whereby the state actually owns a lot of land.
When the state sells land to private developers, various terms and conditions can be attached to the land, example :-
(1) what type of properties and price range
(2) developers have to complete the development within a short time frame (maybe 5 years), failing which heavy penalties would be imposed (prevent hoarding)
(3) all units have to be sold of within a stipulated period, failing which heavy penalties again (prevent hoarding too)
etc..
Penang is a small state, if the state can’t do all that, they’re as good as useless.
Back to the basic, it is all about demand.
I don’t see anyone is in fault here. Everyone has the right to place a price tag on their asset.
The only thing gov can do is come up with a solid housing policy to help those who are left behind. Example -> affordable housing, speculation curbing, foreigner house ownership policy, etc…
@developer
What you say is not wrong, it’s about demand. But I think we have to acknowledge that cost also plays a major role, especially land cost, and a land scarce place like penang.
I see the state is selling big tracts of land to developers in Batu Kawan, to be developed over 20 years. Why sell it to them in one go? Doesn’t that create an opportunity for developers to make money from trading land, rather then developing it?
A good example would be Penang World City. Are we not seeing the developer who bought the land from state trading it with other developers? Are we not seeing the developer making overnight gains just by trading land, without a single property being built?
@developer
True…
@lee
Does the S&P write additional 6% when GST implement?
Just throw out a traditional question for discussion:
Will the BLR going to increase soon?
What are the signs to look for (BLR go up or down)?
@CP
Why do you want to know about the BLR? I am just curious.
Lately, heard people talking about it. I think the BLR has been stayed low for quite some time already. Current economy slowing down. Stock market going upwards trend since 2009.
Anything to watch out for property owner/buyer?
One more observation, Ringgit getting weaker.