According to the National Property Information Centre (NAPIC) in its “Property Market Report 2015” released today the overall property market slowed down by a marginal 5.7% to 362,105 transactions from 384,060 transactions and value down by 8% to RM149.9 billion from RM162.97 billion, against 2014.
Residential sub-sector continued to lead the overall market, with 65.2% contribution in volume and 49.0% in value. The sub-sector recorded a slight downturn by 4.6% in volume and correspondingly down in value by 10.5%. The commercial, industrial, agriculture and development land sub-sectors were also on moderating path, down by 10.6%, 13.0%, 7.5% and 2.4%, respectively.
There were 235,967 transactions worth RM73.47 billion recorded in the review period, declined by 4.6% in volume and 10.5% in value. Performance by states was generally on a low tone. Major states namely Johor and Pulau Pinang recorded mark declines in market activity, down by 20.4% and 16.9%, respectively whilst Kuala Lumpur and Selangor recorded moderate declines of 8.3% and 5.1 %, respectively.
In line with market softening and bleak households’ sentiment, the primary market reacted accordingly as the number of new launches reduced to 70,273 units, down by 19.2% against 2014 (86,997 units). Most states particularly the major ones namely Johor and Pulau Pinang saw substantial declines in their new launches, each down by 42.8% (9,428 units) and 47.5% (2,348 units). The overall sales performance for the country hovered at 41.4% (29,089 units sold), lower than 45.4% (39,491 units sold) performance in 2014.
The residential overhang situation took a downturn as more units were recorded. There were 11,316 overhang units worth RM5.9 billion, up by 16.3% in volume and 56.0% in value. Johor which held 21.9% of the national overhang, saw its overhang increased to 2,483 units, up by 8.5% due to higher unsold in terrace and service apartment types. On similar trend, the unsold under construction recorded an increase of 28.6% to 68,760 units due to large numbers of unsold condominium and service apartment units. The fewer number of new launches partly helped contain the unsold not constructed, down by 20.5% to 10,704 units.
Construction activities were generally on a low tone with the exception of starts. Completions were down by 25.0% (80,850 units) whereas starts recorded a 10.3% increase (188,757 units) over 2014, as higher numbers of service apartments in Johor Bahru (20,914 units) and Kuala Lumpur (13,197 units) commenced construction. On the contrary, new planned supply was on a four-year low at 139,189 units, down by 31.8%. As at end-2015, there were 4.93 million existing residential units with nearly0.89 million in the incoming supply and 0.64 million in the planned supply. The Malaysian House Price Index sustained its moderating trend. As at Q42015, the Malaysian All House Price Index stood at 227.5 points (at base year 2000), up by 5.8% on annual basis. The annual rate of increase for MHPI has been on a decelerating trend since Q4 2013, resulting from the various cooling measures to contain the spiraling prices. On quarterly movements, the index points contracted by 0.8% against Q32015.
Residential property sub-sector
The residential sub-sector is expected to experience further softening in 2016 in view of the various internal and external uncertainties foreseeable in the coming year.Issues on affordable housing and affordability of home purchasers will continue to top the national agenda. The measure announced in budget recalibration, that states all new housing projects priced up to RM300,000 be limited to first-time house buyers.
Commercial property sub-sector
The commercial sub-sector is expected to be equally or more challenging In comparison to residential sub-sector. The retail sector is likely to moderate as cautious sentiment on consumers’ spending lingers at the onset of increasing costs of living. The performance of hypermarkets looks more positive due to nature of goods sold in these premises i.e. necessity goods. The performance of office market is expected to plateau. Downward pressure on rental may be felt by buildings, particularly those with tenants that are related to oil and gas industry. At the same time, the ample office space supply should send some cautionary signals to the authority before approving new developments. The leisure sub-sector is expected to remain positive. The allocation of RM1.2 billion to the Ministry of Tourism and Culture to implement programs and events to achieve the targeted tourist at 30.5 million in 2016 may help support the sub-sector i.e. hotel industry.
Industrial Property Sub-sector
The industrial property would remain moderate in the coming year. The establishment of Principal Hub scheme, which offers multiple advantages to MNCs that uses Malaysia as a base for their regional and global business operations, will entail better prospects for the industrial sub-sector. The flexibility of the scheme that allows companies to decide on the locations of their preference is another plus point for the sub-sector.
Agriculture Property Sub-Sector
The agriculture sub-sector is expected to remain stable in the coming year. RM5.3 billion allocated to the Ministry of Agriculture and Agro-based Industry for the proposed 2016 programmes is expected to support the sub-sector.
Property sector will be able to endure this challenging period with adjustments and corrections expected from both the demand and supply side. Although property sector may see moderation in market activity, the slowdown would still be manageable.