STEADY RESIDENTIAL SECTOR
Market spurred by latent demand post pandemic
SINCE the resumption of economic activities and reopening of international borders, the residential property market has seen a pick-up in activity.
According to the National Property Information Centre (Napic), the residential property sector recorded 116,178 transactions worth Rm45.62bil in the first half of 2022 (1H22), which was an increase of 26.3% in volume and 32.2% in value year-on-year.
However, in light of prevailing uncertainties such as the upcoming Budget 2023, potential 15th General Election and macroeconomic headwinds, can the steady trend so far be sustained for the remainder of 2022?
PPC International managing director Datuk Siders Sittampalam says it’s “anyone’s guess” how the local residential property market will fare for the remainder of this year.
“With plenty going on such as the looming elections and global economic uncertainty, it could have an indirect effect on the property market,” he tells Starbizweek.
Still, Siders says the residential sub-sector has been off to a good start this year.
“Residential property transaction volume and values are up year-onyear in 1H22 and it’s been the highest increase since 2016.
“This can be attributed to latent demand, post pandemic. Many that held back purchases in the market are now back again (since January 2022),” he says.
Siders adds that loan approvals have also picked up, adding however that approval rates are still below pre-pandemic levels.
He also points out that the increase in interest rates so far this year has not had an impact on the market (in terms of demand).
“Going forward, I believe that volume and values should sustain, just like how they were in the first half of this year. It will be steady, barring unforeseen factors, be it domestically or externally.”
According to Napic, the property market performance recorded a rebound in 1H22, a reflection of normalising economic activity as the country moved towards endemicity.
“With the positive projection on economic growth by Bank Negara (at between 5.3% and 6.3% in 2022), supported by the implementation of various government initiatives and assistance, the property market performance is expected to be on track.”
Meanwhile, CBRE|WTW in its property market performance for 1H22, believes that moving forward, transactional activities should remain resilient in locations with good accessibility and comprehensive amenities.
“Developers are anticipated to remain prudent, focusing on established townships and mature locations. In addition, upcoming launches would see a shift towards more sustainable elements to meet buyers’ shift for cost-efficient and eco-friendly homes.”
As at the first quarter of 2022, CBRE|WTW says the Klang Valley landed residential sector remained encouraging.
“Average transacted prices rose 6.8% year-on-year while transacted volume increased 11.2% year-onyear (more than 9,100 units), but was less than the 10,000 units transacted in the fourth quarter of 2021.”
CBRE|WTW says new launches picked up slightly in the second quarter, despite developers maintaining a cautious approach.
“Landed launches continue to perform well and launch prices of terraced houses remained between RM500,000 and RM800,000, except for some priced above the Rm1mil mark in the City of Elmina, Setia Eco Templer and KL East.”
Meanwhile, locations such as Klang Valley South, such as Sepang, Salak Tinggi and Kuala Langat remain the hotspots, says CBRE|WTW.
It says these locations recorded consistent growth, encouraged by industrialisation and good road accessibility.
“Several areas located in the north of Klang Valley are also hotspots of new launches, typically in Rawang, Puncak Alam and Sungai Buloh.”
As for high-rise residential units, Siders says a market study needs to be conducted to ease the oversupply of such properties.
“Comparatively, landed properties tend to do well as there’s always demand,” he says.
Siders also believes that the government could consider bringing back the Home Ownership Campaign (HOC) to spur the market.
To help drive the sector, the government introduced the HOC in June 2020 under the Penjana initiative.
The campaign ended on Dec 31, 2021. Many industry observers and property players believed that the HOC was a huge help to the market and urged the government to extend the campaign period into 2022.
Meanwhile, CBRE|WTW says additional measures are still required to improve market activities for the high-rise residential sub-sector.
“The waiver of stamp duty should continue. A continual increase of the overnight policy rate (OPR) is expected in 2H22 amid the global high-cost environment.
“Since project launches have been limited, competition would also not intensify, with prices remaining stagnant. The cost of borrowing may further impact demand and prices if there is an additional OPR hike 2H22.”
CBRE|WTW adds that the upcoming launch of Mass Rapid Transit 3 may benefit property valuers along the route, including an increase in project launches, particularly in Mont Kiara.
“Moving forward, developers may shift focus to offerings emphasising exclusivity and low-density living with better facilities.”
CBRE|WTW says the existing supply of high-rise residential units stood at 68,555 units in 1H22, whilst 219,398 units are in the pipeline for completion by 2024.
“The bulk of incoming supply will be in central Kuala Lumpur, namely the golden triangle area (30%).”
On market activity, CBRE|WTW says both the average transacted value and asking rents are stable at RM779 per sq ft and RM3.80 per sq ft, respectively, supported by the increased interest from homebuyers and renters.
“The average occupancy rate also increased slightly to 64% due to improved market conditions. Following that, project launches have been limited and the focus is still on the sales of ongoing projects.
“Nonetheless, two transit-oriented development projects were launched in 1H22 in Pudu and Bukit Damansara, with unit sizes ranging from 480 sq ft to 1,080 sq ft priced from RM360,000 and units sized from 1,001 sq ft priced from Rm1.8mil and above.”
According to Napic, Penang, Kuala Lumpur, Johor and Selangor formed about 47% of the total national residential volume in 1H22.
“More than 10,000 units of new launches were recorded, down by 66.7% against 31,687 units in 1H21.”
Against 2H21, the new launches were lower by 13.3% (2H21: 12,173 units),” it says.
“Sales performance for new launches stood at 20.3%, slightly lower than 1H21 (20.6%) and 2H21 (28.1%).”
According to Napic, Johor recorded the highest number of new launches in the country, capturing nearly 23.8% (2,509 units) of the national total with sales performance at 31.8%.
Sabah recorded the second highest number (1,335 units, 12.7% share) with sales performance at 10.6%. This was followed by Perak (1,317 units, 12.5% share) with sales performance at 19.4%.
Terraced houses dominated the new launches. Single storey (2,047 units) and two-to-three storey (5,150 units) together contributed 68.2% of the total units with sales performance at 22%, followed by condominium / apartment units at 19% share (2,009 units) with sales performance at 12.4%.
“Residential property transaction volume and values are up year-on-year in 1H22.” Datuk Siders Sittampalam