Demand for housing likely to be stronger in H2 next year

KUALA LUMPUR: The number of applications for property development licences is expected to be slightly lower in 2012, according to Housing and Local Government Minister Datuk Seri Chor Chee Heung.

“This year there is a very high number of applications. Also, the trend for the property market next year is optimistically cautious,” Chor said after the launch of the Star Property Fair 2011. Chor reiterated that the construction sector was expected to grow 3.4% this year compared with 5.1% in 2010.

He pointed out that speculative activities in the property market might be dampened in the first half of next year due to the recent measures such as the 5% increase in the real property gains tax to 10% for units sold within the first two years after purchase and Bank Negara’s guidelines on responsible lending.

However, Chor said he believed that demand in the housing market would be stronger in the second half of 2012.

“Towards the second half of next year, once purchasers are used to these measures, they would be back in the market.”

Chor said he was expecting a “rationalisation” in residential property prices although they were not expected to be lower due to increases in the cost of land, raw materials and wages.

“This is because the Federal Government has put in place measures to build affordable homes for first-time buyers or those with household incomes not exceeding RM7,000 a month. When the Federal Government starts to do this, property developers would invariably build homes at affordable prices.

“But they would not be right in the middle of Kuala Lumpur; maybe they would be in Rawang and Semenyih. The price of housing cannot go up every year; it has to reach equilibrium at some point.”

Chor said that one reason for the rise in property prices in Penang and Selangor was the high premium paid by developers for the conversion of land use.

The Star Property Fair is being held until Nov 27 at the Kuala Lumpur Convention Centre.

Developers such as SP Setia, IOI Properties, Naza TTDI and Mah Sing are exhibiting their property offerings at 130 booths. - The Star