House prices expected to stabilise as a result of measures

PROPERTY professionals, especially developers, continue to grumble about the challenging first six months of this year as a result of various government and banking measures kicking in with some developers delaying launches to the second half of the year.

A survey by the Real Estate and Housing Developers’ Association (Rehda) reveals that 87% of 150 respondents are “pessimistic or neutral” about the first half of the year.

While the situation may indeed be in a flux for some developers, especially the smaller ones as buyers turn cautious, all is not lost when one considers the big picture.

In an earlier seminar on the property sector, Valuation and Property Services Department deputy director-general Faizan Abdul Rahman said house prices were expected to stabilise as a result of these measures. He was speaking at the 7th Malaysian Property Summmit 2014 organised by the Association of Valuers,Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia late last month.

The distress among developers is understandable. Because of Malaysians’ general interest in this sub-segment, developers have focused on meeting this demand over the years. This focus on the residential market escalated considerably between 2010 and 2013, accounting for multiple launches among developers.

Faizan said residentials formed the bulk of transactions for the first nine months of last year, or 64% of about 280,000 transactions. In terms of value, it accounted for RM51.51bil of total value amounting to RM105.7bil, or 49%.

Faizan said the residential sub-segment would continue to drive the market in the months ahead with prices moving on a more even and moderate keel.

One of the speakers, property consultancy C H Williams Talhar & Wong managing director Foo Gee Jen said that looking ahead, property investment would continue to be relatively more popular than other forms of investments with rising demand for affordable housing.

“Genuine demand will lead the market. There will be no more double-digit price increases,” he said.

Analysing prices for the first nine months of 2013, Foo said serviced apartments had the highest price on a per square foot basis at RM609 per sq ft while terraced housing were the lowest, at RM327 per sq ft.

“In the landed segment, he said most prices had doubled over the years. Bandar Utama’s double storey housing was priced at RM280 per sq ft in 2005. It was RM620 per sq ft in 2013. The overall landed sector had average percentage increase of 8% between 2005 and 2010 but hit 18% a year for three consecutive years between 2011 and 2013.”

He came to this conclusion after analysing prices in Taman Tun Dr Ismail, Bandar Utama, Bukit Jelutong, Kota Kemuning and Bandar Kinrara.

Foo said gated and guarded housing experienced the greatest increase, averaging 10% between 2005 and 2012 with selected developments having a higher annual appreciation of 14.4%. Detached houses had the highest return at 27.2% per annum followed by semi-detached houses at 17.3%.

“Gated and guarded housing was introduced into the Malaysian market more than 10 years ago. In 2013, this segment outperformed the rest of the other types of housing. In 2005, a detached house in a gated and guarded community was RM600 per sq ft (2013: RM1,200 per sq ft), a semi-detached house was RM400 per sq ft in 2005, doubling to RM975 per sq ft last year,” he added.

Terraced housing averaged RM480 per sq ft in 2005 and increased to RM600 per sq ft last year, he said.

As for the condominium market, Foo said total stock had grown considerably over the years and as at 2013, there was more than 355,000 units. Of this, about 27,000 units are luxury condominiums. He did not defined what he considered as a luxury condominium.

Foo said: “The supply of luxury condominiums grew at an average rate of 20% a year between 2008 and 2013 with a vacancy rate of 25%.” He cautioned that more than 32,000 units are expected by the end of this year.

“It will be a challenging market for developers in 2014. Residential property market is expected to cool down, prices stable and secondary sales slow,” he said.

The trend for developers to seek development in fringe areas continue to escalate with developers now building in areas with a radius of about 40km away from the city centre.

Mah Sing Group Bhd is building M Residences in Rawang and Southville City in Bangi. In Shah Alam, Sime Darby group is development the Elmina township andIJM Land Bhd in Bandar Rimbayu. Puchong and Semenyih have the highest concentration of new launches.

With affordability being the main issue the last few years, Foo says this is expected to change with the government’s programme on affordable housing. The government aims to build 300,000 units of affordable housing for the next five years, of 60,000 units a year. - The Star