New Sabah Times, Photo Credit to New Sabah Times
clock 16-07-2018
hit 2,622
Housing Demand to Bounce Back in 2019

The residential property market is expected to bounce back in 2019, amid a growing appetite for residential units in the first quarter of 2018 compared to last year.

"There's a major improvement for residential units in Malaysia's property market in the first quarter this year with demand increasing by four percent, while transaction value grew by one percent" said Saw Wai Kean, principal of Twin Realty, a real estate consultancy.

Demand in Kota Kinabalu and Penampang grew by 16% and 51% respectively with an increase in the transaction value by 31% and 80%. Saw noted the transaction value for residential units is increasing at a steady pace with an average appreciation rate of 8.2% over the seven-year period (2010-2017), with KK at 12% and Penampang at 11%.

"There's a growing confidence in the property market, and it's advisable for buyers looking into residential properties to make their purchase as soon as possible and not wait for the right time" he told reporters after giving his talk on property market outlook 2018 at KK One Stop Property Centre at Sutera Avenue.

He also attributed brightening prospects in the property sector was due to the current government's policies such as the zero-rating of the GST (Goods and Services Tax) which may spur market sentiment.

Saw explained the decrease in residential volume in Malaysia over the past years was due to the stringent housing loan approval by banks, which causes lower buyer sentiment for residential units.

"According to Bank Negara sources, the housing loan approval rate in May this year was set at 42% but this is a healthy sign which helps steer clear of risks of a property bubble in the country" he added.

Due to improving conditions in transaction volume and demand, Saw noted the average residential price per unit in KK to grow by 3% at RM579,860 while Penampang will see an increment of 13% at RM390,530. For the country, he forecasted a 6.5% increase in the average residential price per unit in Malaysia, reaching RM374,390 by the end of 2018.

"Noticeably, there's no increase in property overhang (unsold completed residential properties) in the country which stood at 11% while for KK at 51% and Penampang at 9%" said Saw, who underlined this situation will depend on the developers and their targeted buyers.

He noted the prices for residential units in KK are on the high end with developers setting prices for residential units at RM900 -RM1,000 per square foot, that are mostly targeting foreign investors but is beyond the reach for local people. "This all boils down to the developer, if they launched something which other people cannot afford, then this surplus will occur" he said.

Looking at the income level of overall Sabahans, Saw noted residential units sold at RM800 sq ft are still beyond the reach of local people in Kota Kinabalu. The suggested price range for residential prices according to Saw, should be RM700 sqft while for suburban areas such as Inanam would be between RM500-RM550 per sqft.

"There is no need to worry over the value of property overhang in KK although it looks quite concerning" assured Saw. He noted there is nothing wrong with demand, just that local people still could not afford to buy residential units in KK because the prices are too high.

For Penampang, Saw pointed out residential units in the area are selling like ‘hot cakes' due to improved connectivity, especially with the ongoing Pan Borneo Highway project, coupled with affordable property prices for locals. He noted these factors put Penampang's overhang situation at a low level.

"The buying sentiment among the people here is very different from Kuala Lumpur (KL), people here are more conservative and prefer to wait until the construction reaches a certain stage, then they will come and purchase" he said.

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