KUALA LUMPUR: The annual rate of increase in property prices has slowed down across the board in the third quarter of 2014 (3Q14), according to Bank Negara Malaysia’s (BNM) House Price Indicators, released in its Monthly Statistical Bulletin January 2015. 

Prices of terraced houses rose 8.6% year-on-year in 3Q14 compared with 9.9% in 3Q13. Meanwhile, semi-detached properties saw prices rise 4.6% compared with 15.2% in the same period in 2013, bungalows rose 7.3% compared with 17.9% and high-rises rose 9.5% compared with 17%. 

“The rate of increase in property prices has dropped. The thing that remains the same is house prices increasing but at a slower rate. We expect house prices to continue increasing but the speed of it will not be as fast as before. That seems to be the general trend now. The number of transactions is lower and we do expect property prices to increase after the GST (goods and services tax) kicks in next month,” Ken Holdings Bhd’s group managing director Sam Tan told The Edge Financial Daily. 

“The population is growing so there will be demand for property;  the question now is the affordability,  The salary equation. How much can people afford to pay for the property that they want? Property buyers are a bit more selective nowadays,” he added. 

Tan also noted that while there is still demand, a crucial factor is whether property buyers are able to obtain housing loans.

In July 2013, BNM introduced measures to rein in household indebtedness, including for financing for home purchases. 

“We are going through a shifting phase. Buyers were used to easy credit and low down payments. Now, it is tougher for them to get loans from banks. Buyers have to put up more up front. So it depends on how much they want that piece of property and whether or not they can afford it,” said Tan who is also the chairman of Rehda Youth — the youth arm of the Real Estate & Housing Developers’ Association Malaysia.

Maybank Investment Bank Research pointed out in a February note that there are already signs that property prices are easing. “House price indices (HPIs) in major cities have started to trend down quarter-on-quarter (q-o-q) in 3Q14 (Malaysia: -0.4% q-o-q, KL: -1.4%, Selangor: +0.9%, Penang: -0.9%, Johor: -2.8%) after peaking in 2Q14 (Malaysia: +3% q-o-q, KL: +3%, Selangor: +2%, Penang: +3%, Johor: +4%),” it said. 

“Pre-GST property purchases have not turned out to be as strong as expected as banks have significantly tightened their criteria for mortgage financing. Recent loan rejection rates have been as high as 40%-50%, compared with 10%-20% in 2013. On top of that, buying sentiment is also somewhat affected by a weaker economic outlook dragged by lower crude oil prices given Malaysia’s net oil exporter position,” it added. 

Even so, Mapex Property Showcase 2015 held recently at 1 Utama Shopping Centre generated sales of RM33.4 million over the five-day event. It was organised for the first time by Rehda Youth.

This article first appeared in The Edge Financial Daily, on March 24, 2015.