VARIOUS issues related to affordability and speculation continue to hog the overall residential market for the first half of this year. Coupled with the recently concluded 13th general election, the first half was “relatively sluggish”, property research reports concluded.
In fact, prices have been “flattish over the past 12 months”, one report concluded, due in part to the various cooling measures instituted by the Government.
The primary high-end condominium market appears to be performing better than the secondary market due to various incentives and attractive payment schemes and product offerings which come in smaller sizes in line with today’s market trend.
In the prime areas of KL city centre (pic) and Mont’Kiara, prices and rentals remain generally flat due to the high supply and a weak leasing market, says Knight Frank.
In its research report for the first half, PPC International Sdn Bhd says it “believes that the residential market is experiencing a general slowdown.”
This view, the report says, is supported by falling transactions. The total volume of transactions in the first quarter of this year dropped to 17,796 units compared to 23,790 units in the same period last year.
The existing residential property stock for the first half of this year is 4.67 million units. However, the new planned supply dropped to 31,677 units in the first quarter of this year from 32,472 for the same period last year.
“The drop in the total planned supply for Malaysia could be interpreted as a sign of developers exercising caution in launching new residential projects,” the report says.
The slower momentum, however, is not evidenced in Johor, especially in Iskandar Malaysia.
“The average house price dropped from RM251,731 in the last quarter of 2012 to RM245,036 in the first quarter of 2013. Kuala Lumpur, Selangor and Penang also experienced a decline in average house prices.
“However, there is no specific record on falling prices of any category of real estate. We believe, the drop in average house prices is largely brought about by higher volume of low to medium cost residential units sold.
“Against this environment, PPC believes that the residential market is experiencing a general slowdown,” the report says. The demand for landed housing continues to be high, notwithstanding the fact the returns do not justify as investment properties, the report says.
Going forward, the interest is expected to hover around developments close to the ongoing MRT/LRT extensions.
Knight Frank says prices of condominiums in the secondary market in the suburban areas are expected to continue to perform well, supported by sustained local demand.
“Prices of well-located high-rise properties that are managed well continue to appreciate, closing the gap between primary and secondary prices,” the Knight Frank report says, adding that yields continue to be compressed as price increments/high selling prices do not correspond with the lagging rental market.
In the primary market, there were a few high-rise residential property launches towards the end of the first half. Enquiries with developers by property consultants revealed good takeup rates of these developments.
Among the most prominent is Venus Assets’ Four Seasons Places located within KL city centre, the first of its brands in South-East Asia.
“The popularity of global branded residences continues to be on the rise, setting a new definition to luxury living complete with hotel supported services,” Knight Frank says.
The average selling price for Four Seasons Place is in the region of RM2,500 per sq ft with buyers comprising mainly Malaysians and foreigners from Japan, Hong Kong and Taiwan.
More launches have been scheduled for the second half with a certain degree of “caution”, taking the queue from overall global situation.
The PPC report says “house prices recorded by the National Property Information Centre indicate that the market is creeping into a consolidation phase.”
“PPC does not foresee a definite impact on the demand from young professionals, given the shorter home loan repayment period and the pricing of residential market which is beyond their financial income bracket.”
While foreigners will be attracted to predominantly Kuala Lumpur city centre, Penang and Iskandar Malaysia, local purchasers will be geared more towards purchasing township developments, especially landed homes, the PPC report says.
Moving forward, 2013 will also see developers acquiring land for medium-sized developments.
While the market generally is in a cautious mode, the outlook for residential market in urban locations is bullish, it says. - The Star
