More people buying new properties in the second quarter

This article first appeared in City & Country, The Edge Malaysia Weekly, on October 14, 2019 - October 20, 2019.

Wong believes the OPR cut is not expected to significantly impact the property market

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In the second quarter of the year, the rate of sales of incoming high-rise residential developments in prime locations such as Kuala Lumpur and Selangor saw some improvements, which were attributed to the Home Ownership Campaign (HOC) that started early this year, according to Savills Malaysia director of research and consultancy Amy Wong in presenting The Edge/Savills Klang Valley high-rise residential monitor for the quarter.

“While the mass housing market has benefited the most from the campaign, the higher-end segment has seen its share [of benefits] too,” she says.

localities, the average take-up rates in Bandar Sunway, Mont’Kiara and Subang Jaya were 10% to 15% higher than the quarter before while those in KLCC, Petaling Jaya and Shah Alam increased between 1% and 5%.

During the quarter, Bank Negara Malaysia cut the overnight policy rate (OPR) 25 basis points to 3%, resulting in lower bank lending rates. Yet, the cut is not expected to significantly impact the property market, opines Wong.

“We view the announcement of the extension of HOC and the OPR rate cut during the review quarter as good moves to stimulate the property market in the following quarters, although the impact will not be significant,” she says.

Meanwhile, the property overhang in Greater KL remains an issue. According to the National Property Information Centre, the number of overhang high-rise residential units, including serviced apartments and small offices/home offices (SoHos), in Greater KL stood at 9,286 as at 1Q2019 and were valued at RM6.8 billion.

In the secondary market, high-rise residential transactions were limited in the prime areas that Savills focuses on, such as KLCC, Bangsar, Mont’Kiara, Subang Jaya, Bandar Sunway, Petaling Jaya and Shah Alam. During the quarter in review, no transaction was recorded for the selected existing high-rise residential properties with two and three bedrooms in the aforesaid areas.

Wong expects the average prices of high-rise residential properties to remain flattish with marginal price fluctuations within 2%, based on historical transactions and price trends.

In Kuala Lumpur, secondary market transactions were limited during the quarter. Based on the 2-bedroom high-rise residential units sampled, average prices in KLCC and Mont’Kiara fell 1.8% and 0.5% respectively from the previous quarter. In contrast, average prices in Bangsar grew 1%.

During the quarter, the average asking price of a 2-bedroom unit in KLCC and Mont’Kiara declined 3.4% and 0.4%

respectively quarter on quarter. In contrast, the average asking price in Bangsar was 2.6% higher.

The average take-up rates of the on­going developments sampled improved quarter on quarter 5% to 46% in KLCC and 12% to 72% in Mont’Kiara. Among the projects sampled were YOO8, SO Sofitel @ Oxley Towers and Royce Residence in KLCC and The Ooak @ Kiara 163, Inspirasi Mont’Kiara, KaMi Mont’Kiara and Astrea Mont’Kiara in Mont’Kiara.

For Selangor, the sampled properties in Subang Jaya, Bandar Sunway and Petaling Jaya saw limited transactions of 3-bedroom units.

In Bandar Sunway, the sampled units saw their average prices fall 0.2% quarter on quarter, while those in Subang Jaya and Petaling Jaya saw their average prices grow 1.3% and 0.4% respectively.

The average take-up rates of ongoing developments sampled in Bandar Sunway and Subang Jaya improved the most quarter on quarter, 15% and 10% respectively. The sampled projects in Bandar Sunway included Sunway GEOLake Residences, YOLO Signature Suites, Union Suites and Greenfield Residence while those in Subang Jaya included The Grand SS15, The Suave @ SJCC and Paisley Serviced Residences.

In Petaling Jaya, a smaller increase was recorded in the average take-up rates due to a larger number of incoming supply compared with Bandar Sunway and Subang Jaya.

In the near term, Wong believes that the secondary market in Greater KL will remain subdued. “The market remains challenging with an increasing number of auction properties seen. The primary market, however, will still be able to move on with reasonable pricing and appropriate unit sizes, riding on the HOC.”

 

A quiet secondary market

In KLCC, the secondary market continued to be quiet with no transactions recorded in the 2-bedroom units sampled.

The majority of the units sampled also saw asking prices trending downwards during the review period. For example, average asking prices of 2-bedroom units in Hampshire Residences, Hampshire Place, Pavilion Residences, The Troika and Idaman Residence fell between 1% and 7.3% from a year ago.

Wong believes that property prices in KLCC will see a similar trend. Based on the sampled units, prices of 2-bedroom residential units in the area fell 1.8% quarter on quarter to between RM810 and RM1,800 psf.

As for incoming developments, the take-up rates increased an average of 5% from the previous quarter. “This indicates that the primary market is still making progress, though at a slower pace,” says Wong.

In Bangsar, no secondary market transaction was registered for the 2-bedroom units sampled during the quarter. Other high-rises in the area saw limited transactions.

Wong expects property prices there to hold up. Prices of 2-bedroom residential units were estimated at RM770 to RM1,190 psf in 2Q2019 — about 1% higher than the previous quarter.

In terms of asking prices, the sampled units in Bangsar did not see much difference compared with the previous quarter, fluctuating within a 5% range.

As for incoming developments, there were four low-density residential projects — as was reported in 4Q2018 — while other developments were still in the planning stage.

In Mont’Kiara, there were some secondary transactions during the quarter but not for the sampled 2-bedroom units. Otherwise, there was no sign of improvement for this market segment.

In contrast, the primary market saw promising improvements in terms of the incoming developments’ take-up rates, which saw an average growth of 13%. Wong says Mont’­Kiara has plenty of projects in the planning stage that would easily offer over 2,500 units.

Price movements were estimated to be similar to the figures seen in 1Q2019, ranging from RM610 to RM710 psf for a 2-bedroom unit.

Based on the sampled units, Mont’Kiara’s average asking prices were flat during the quarter, dropping a mere 0.4%.

 

Flattish secondary market prices

Subang Jaya saw an inactive secondary market during the quarter with no transactions recorded for the 3-bedroom units sampled.

Wong estimates that property prices there remained similar to those in 1Q2019. The average prices of the sampled units ranged from RM450 to RM640 psf — 1.3% higher than the previous quarter.

Average asking prices in Subang Jaya were flattish during the quarter, fluctuating within a 1% range of RM595 psf — slightly lower compared with the RM598 psf seen in 1Q2019.

Incoming high-rise residential developments saw a commendable average take-up rate of 70% — 10% higher than the quarter before.

In Bandar Sunway, secondary market transactions were limited for the 3-bedroom units sampled.

Based on historical transactions and trends, the price of a 3-bedroom unit there was estimated at RM470 to RM785 psf during the quarter — largely similar to the numbers seen in 1Q2019.

The average asking price of properties sampled in Bandar Sunway increased marginally 1.6% to RM641 psf during the quarter.

As for the primary market, incoming properties saw some improvements in take-up rates — an average of 65% during the quarter, 15% higher than the preceding quarter.

In Petaling Jaya, some secondary market transactions of high-rise residential units were recorded — mainly in Petaling Jaya Utara — while no transaction was recorded for the sampled 3-bedroom units.

Wong expects property prices in Petaling Jaya to remain firm at between RM560 and RM735 psf with an average increase of 0.4% quarter on quarter.

In the primary market, the incoming high-rise residential developments saw an improved take-up rate of 57% during the quarter, a 5% growth compared with the previous quarter.