TA Securities expects market headwinds to persist for property sector

KUALA LUMPUR (Jan 18): TA Securities Research has maintained its “Underweight” rating on the property sector, as “weak market sentiment, increasing supply and tight lending environment are expected to weigh on property sales”.

The rating was in spite of policy changes by prime minister Datuk Seri Najib Razak that would have “positive impact on the demand” of 1Malaysia People’s Housing Programme (PR1MA) announced yesterday.

The government on Tuesday raised monthly income eligibility for PR1MA homes to RM15,000, from RM10,000 previously, and cut the imposed renting and selling moratorium from 10 years to 5 years.

“The increase in monthly household income eligibility will increase the pool of first time home buyers who are qualify for PR1MA. In addition, the shorter moratorium period is expected to further increase the scheme marketability,” TA Securities said in a note today.

However, the research house highlighted inadequate supply of PR1MA homes, particularly in urban areas, and lack of accessibility to end-financing to remain the bigger concerns for buyers.

“As far as impact to private developers is concerned, we think this will present competition to existing players, given PR1MA houses are becoming more attractive to buyers,” it said.

“We see affordable housing developers Hua Yang Bhd and Sentoria Group Bhd are the biggest losers, given they are mainly focusing in the affordable housing segment,” it added, while noting that Sentoria’s experience in Kuantan PR1MA projects would help the company secure more PR1MA contracts.

“Declining property sales over the past years and narrowing margins due to heavy marketing and promotional campaigns, could pose further downside risk to earnings,” TA Securities said. — theedgemarkets.com