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PETALING JAYA (Feb 19): Marginal price drops in residential properties have been observed in some established areas in the country while the country continues to grapple with the high number of overhang units in the housing market.
According to Rahim & Co International Sdn Bhd, the latest data as at end-September last year has revealed a total of 43,219 overhang units worth RM29.47 billion sitting idle on the market.
Johor holds the highest count of overhang units at 13,767 units, followed by Selangor at 7,233 units and Kuala Lumpur at 5,114.
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“There is actually a price correction observable in the market. I wouldn’t be surprised if [the house prices] drop due in part to the overhang situation,” Rahim & Co director of research Sulaiman Saheh said at a press conference in conjunction with the release of the “Rahim & Co Research – Property Market Review 2018/2019” in Kuala Lumpur today.
He said home prices have consolidated last year with the Malaysian House Price Index registering a year-on-year (y-o-y) growth of only 1.1% in last year’s third quarter (3Q2018), compared with a 6.5% y-o-y rise in 3Q2017.
“There are actually signs of a drop in median house prices in established areas already. Dropping does not mean it is a freefall drop, it means probably a 1% drop, which is actually a market adjustment. But the secondary market has seen up to a 3% drop [in prices]. Nevertheless, the market is still holding up,” he added.
Nevertheless, Sulaiman believes the residential property segment could be bottoming out as residential transaction volume has recorded a 1.3% y-o-y increase to 144,319 in the first nine months of 2018 although in terms of transaction value, it was down by 0.7% over the same period at about RM49.46 billion.
“The residential market may take another one to two years [to recover from the slowdown] because I don’t think we are going to be making it easier for people to get loans anytime soon given Bank Negara Malaysia’s measures in responsible financing are still relevant.
“I think the growth in residential transactions will depend on the income growth of the population,” he elaborated.
Rahim & Co executive chairman Tan Sri Abdul Rahim Abdul Rahman added that this year will continue to be a buyer’s market as there are not only an abundance of available properties, but also a wide range of financial aids and schemes that encourage homeownership.
“The dream of owning a home is attainable but a smart strategy and planning are required,” he said.
