Strong demand for affordable homes
Segment expected to do well despite soft property market
KUALA LUMPUR: Affordable housing will continue to lead demand in the residential segment of the property market, amid expectations that sentiment will remain soft this year.
Finance Ministry valuation and property services director-general Rahah Ismail said despite the challenging economic environment, the demand in the residential segment, particularly for houses ranging between RM200,000 and RM250,000, will remain strong.
“However, new launches will continue to slow down as developers opt to review their products and pricing,” she said, adding that there will be increased competition between the primary and secondary residential markets moving forward.
In the first nine months of 2016, the volume of new launches fell drastically by 57% year-on-year, as merely 23,112 new residential units were launched.
The quantity of unsold or “overhang” units increased by a whopping 60% to 14,193 units, compared to the same period in 2015.
With regard to the performance of the domestic property market, Rahah highlighted that the Malaysian House Price Index (MHPI) has continued to increase, albeit at a diminishing trend.
“Although the property market is soft in the third quarter of 2016, the MHPI rose by 5.3%, on a yearon-year comparison.
“This shows us that the prices of residential units have continued to hold up,” she told reporters at the 10th Malaysian Property Summit 2017 yesterday.
To note, MHPI measures the general trend of domestic residential unit prices.
In the aftermath of the 2007 to 2009 global financial crisis, the MHPI rose drastically by 61% between a six-year period of 2010 to 2015 due to increased speculation and higher land value.
In contrast, between 2004 to 2009, MHPI merely increased by 17%. Within the period of year 2000 till 2016, the index’s annual change in percentage peaked in 2012 at 11.8%, and has been moving on a downtrend ever since.
Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) president Foo Gee Jen prefers the current growth trend in residential pricesbecause of sustainability.
“It is healthy to have an annual growth of 5% to 8% as it is more sustainable, unlike in the past five years where we have witnessed double digit growth,” said Foo.
Rahah urged property developers to exclude freebies and rebates in pricing their products as it would lead to higher market price of the units.
This could eventually affect the house buyers’ eligibility for home financing as a larger loan amount would be required.
She also called upon the prospective house buyers, especially the first time home buyers, to consider purchasing a unit from the secondary or the auction market.
“In the first nine months of 2016, while only 46.5% of residential units under the primary market were priced below RM300,000, close to 70% of the units in the secondary market were in that range.
“First time home buyers should consider purchasing a property from the secondary or the auction market to find a suitable and affordable residential unit,” said Rahah.