Thursday 28 Mar 2024
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This article first appeared in The Edge Malaysia Weekly, on October 26 - November 1, 2015.

 

Residential property transactions fell 2.6% in the first half of 2015 (1H2015) to 119,604 and the value of transactions dropped 9.7% to RM36.4 billion. In comparison, 1H2014 recorded a 2.3% increase in transactions to 122,830 with a value growth of 19.4% to RM40.3 billion.

Residential properties accounted for 64% of total transactions in 1H2015, according to the Economic Report 2015/16.

Transactions fell in four major urban areas — Kuala Lumpur (6.4%), Selangor (1.8%), Johor (17.9%) and Penang (14.2%). The decline was in tandem with the slowdown in the property sector.

The second half of 2015 will not be too exciting for the sector, industry observers say. The view is that 2016 should see growth remaining flattish.

“The demand for properties is still strong, but the bottleneck is in the loan applications as banks are not being too encouraging and the margins of financing are not favourable to buyers,” says an analyst with a local stockbroking house.

“Although there appears to be a quarter-on-quarter improvement for developers, the pace is not as significant as in previous years, and we can expect house prices to stabilise.”

According to the Economic Report, new launches dropped 44.1% to 27,231 units in 1H2015 compared with a 56.3% increase to 31,155 units in the previous corresponding period. New housing approvals also fell 32.9% to 66,770 units compared with a 37.3% increase to 99,461 units in 1H2014.

The Malaysian Housing Price Index (MHPI) saw a q-o-q slowdown to 5.9% in 2Q2015 from 7.8%. This was attributed to, among others, the prudent measures introduced in recent years to cool the property market.

The MHPI grew 11.8% in 2012, 11.6% in 2013 and 9.4% in 2014.

The growth in outstanding loans for the purchase of residential properties slowed from 15.2% in 2010 to 13.6% in 2014 and 11.4% in August 2015.

Meanwhile, the all-house average price in Malaysia hit the RM300,000 mark in 1H2015 with Selangor, Penang, Sabah and Sarawak continuing to exceed the average price since 2004.

Preliminary data for 2Q2015 shows the MHPI registering 220.2 points, indicating that the all-house price has more than doubled since 2000, according to the Economic Report.

The median house price of RM242,000 in 2014 exceeded the median annual household income of RM55,020 by 4.4 times vis-à-vis the global norm for housing affordability of three times.

Growth in incoming supply was steady at 13.8%, compared with 10.3% in 1H2014.

During the first six months of the year, the Klang Valley continued to dominate the incoming supply, accounting for 29% of total supply.

Housing starts rebounded 38% to 100,712 units in 1H2015 — compared with a 1.8% decline to 72,935 units in 1H2014 — supported by serviced apartments and condominiums/apartments, which accounted for 28.3% (28,541 units) and 22.5% (22,673 units) of total starts respectively.

The take-up for residential units rose 31.4% to 8,542 units in 1H2015, compared with a 23.8% increase to 11,588 units in 1H2014.

The government has provided a number of updates on the various affordable home initiatives it has undertaken in recent years.

As at August 2015, Perbadanan Perumahan Rakyat 1Malaysia (PR1MA) saw 560 homes completed, 41,263 under construction and 120,751 in the planning stage. A total of RM1.2 billion has been spent on the programme.

The People Housing Programme (PPR), which caters for low-income earners and resettlement of squatters, saw RM209.6 million spent on building 15,996 homes as at August 2015. Of these, 4,266 units are for rent and the rest for sale.

Rumah Mesra Rakyat 1Malaysia, which helps the low-income group, such as fishermen, farmers and poor families, had 2,183 homes under construction as at August 2015, costing RM142.2 million.

Other efforts by the government to ensure that Malaysians have a roof over their heads include Rumah Idaman Rakyat, which it has pledged to build 6,296 homes nationwide, with 60% of them costing below RM250,000 and the rest, between RM250,000 and RM350,000.

Rumah Aspirasi Rakyat, which provides an opportunity for youth to own a home at a discounted price, currently has 22 ongoing projects comprising 11,872 units costing about RM2.6 billion.

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