Penang property sales lower in second quarter

Valuer sees residential transactions dropping 50%-60%

GEORGE TOWN: The number and value of residential property transactions in Penang are projected to decline between 50% and 60% in the second quarter of 2020 from the preceding first quarter.

“We project a 50%-60% drop from the first quarter because the property market went into a silent mode after the movement control order was implemented in March.

“Most of the transactions happened in January and February,” Raine & Horne Malaysia director Michael Geh said.

According to Napic statistics, in the first quarter the number and value of transactions for Penang stood at 2,748 and Rm1.06bil.

On the island, depending on location, the current price of high-rise residential properties is 5% to 10% lower than in 2019.

“After the moratorium on the repayment of housing interest, we expect a further drop of 5% to 10%.

“We are not seeing a rush to sell properties because of the freeze on the repayment of housing interest,” he said.

According to Geh, the cash incentives offered to promote the sales of housing projects in the primary market for the last 12 months had impacted the secondary market.

“The sales in the secondary market have contracted by about 30% as a result,” he said.

On oversupply, Geh said: “The overhang of residential properties in Penang in 2019 was 3,353 units, compared to 3,445 in 2018.

“Some 35% of the overhang residential properties are priced between RM500,000 and Rm1mil.

“About 25% are those priced between RM300,000 to RM500,000, while another 22% are priced above Rm1mil,” Geh added.

However, there is a surge of interest for the rental market.

“We can see more interest to rent than to purchase for the past 12 months, which may have to do with the difficulty of obtaining a housing loan.

“So far, the interest in rental has yet to trigger an increase in rentals.

“For shopping lots in a mall, the rentals have been lowered by 20% to 30% to retain existing tenants whose business have been affected by the virus outbreak,” he added.

Geh said he could not see beyond the second quarter.

“When will the country open up its borders again? Until it opens up, the interests shown by overseas buyers for the residential properties would not translate into sales.

“We have seen healthy interests from overseas buyers because of the weakened ringgit, which has made the local properties even more attractive.

“The demand from the local market might be dampened due to the increase in unemployment in the near future.

“Many companies have just started to resume operations and will be reassessing their human resources needs soon.

“This means they could embark on retrenchment exercises to clear excess headcounts because of the business environment.

“Because many parts of the globe are still in lockdown, we can see companies in the manufacturing sector not taking in new employees. Therefore, we can expect the demand for affordable housing in Penang to be weak,” he said.

On the federal government’s decision to waive the real property gain tax (RPGT) from June 1, 2020 to Dec 31, 2021 and restart the national home-ownership campaign, Geh said these measure were welcome and should have a positive impact on the property market. “The RPGT waiver will jump-start the property market,” he said.