THE domestic property market is likely to remain slow in terms of transaction volume going forward. This will be mainly due to the weak economy and stringent bank lending policies, says Jeffri Rahim, vice-president of project marketing and estate agency at Savills (M) Sdn Bhd, when presenting The Edge/ Savills Klang Valley Residential Monitor 2Q2016.
“Market response on the primary and secondary markets has been mixed. Properties on the secondary market are still seeing slow growth in terms of transaction volume as the majority of homebuyers are too cautious in making a commitment. This has led to difficulties in closing deals,” he points out.
There have been more launches in recent months but investor interest has depended on the price, location, developer and the surroundings, he says, adding that there are many good deals for homebuyers and investors on both the primary and secondary markets at present.
“The current weak sentiment has forced homeowners and investors to lower their asking prices to more reasonable levels. Developers are also offering more goodies and attractive sales packages and cash rebates. This means genuine homebuyers can get properties with lower up-front cash,” Jeffri observes.
Nevertheless, he advises buyers to assess their financial capacity and do their research before committing to any purchase.
“In general, the period under review saw price growth, albeit at a slower pace for all residential types except 1-storey terraced houses. The growth stemmed from demand supported by improved accessibility and infrastructure, and ample amenities,” he says.
1-storey terraced houses
The prices of 1-storey terraced houses sampled remained the same in 2Q2016 except in Bangsar Park, where they fell to RM1.15 million from RM1.3 million, and in Puchong Perdana, where they rose to RM340,000 from RM320,000, from the previous quarter.
Year on year, prices fell 2% in TTDI Abang Hj Openg, 2.8% in TTDI Burhanuddin Helmi, 17.9% in Bangsar Park and 4.5% in Lucky Garden. There was an increase of 1.5% in Bandar Sri Damansara and 9.7% in Puchong Perdana.
Meanwhile, rent per month rose to RM1,320 from RM1,300 in Bandar Sri Damansara, from RM2,100 to RM2,200 in Bangsar Park and from RM1,500 to RM1,600 in Bandar Kinrara.
As for annual gross yield, Bangsar Park led with a 0.36% increase to 2.3%, followed by Bandar Kinrara with a 0.24% increase to 3.84%. And despite a dip of 0.31%, Puchong Perdana still registered the highest annual gross yield of 4.94%.
“There tends to be less speculation on 1-storey terraced houses because of their limited supply and popularity among genuine homebuyers. In locations such as Bangsar Park, 1-storey terraced houses tend to be among the most mature, which means price growth at this time will be limited,” Jeffri explains.
2-storey terraced houses
The sampled 2-storey terraced houses in Bandar Sri Damansara, SD7, recorded the highest price growth year on year, rising 23.71% to RM1.2 million. There was also a year-on-year increase of 5% to RM1.05 million in Bandar Sri Damansara, SD10, an increase of 2.63% to RM780,000 in Bandar Puchong Jaya and an increase of 1.32% to RM770,000 in Pusat Bandar Puchong.
SD7 also saw the highest quarter-on-quarter price growth of 9.09%, followed by SD10 (+5%), Bandar Utama (+4%) and Bandar Puchong Jaya (+4%).
As for monthly rent, only Bangsar Baru and Pusat Bandar Puchong saw an increase quarter on quarter. Rent rose from RM3,100 to RM3,200 in the former and from RM1,500 to RM1,600 in the latter. Meanwhile, rent per month dropped to RM2,700 from RM2,900 in TTDI Athinahapan, from RM1,500 to RM1,400 in USJ 6 and from RM2,500 to RM2,450 in Bandar Utama BU1.
All sampled areas except Bangsar Baru and Pusat Bandar Puchong saw a dip in annual gross yield. Bangsar Baru and Pusat Bandar Puchong saw a marginal increase of 0.07% to 2.26% and of 0.15% to 2.49% respectively.
According to Jeffri, it is natural for the prices of expensive properties to grow at a slower pace than those of more affordable properties in a period of economic weakness.
“Generally, the contributing factors (to price growth) are the condition of the house, the location and the surroundings. For example, the recent completion of the LRT extension that covers most parts of Puchong has helped,” says Jeffri.
While the prices of sampled high-rises, with the exception of Marc Serviced Residence, showed no growth in 2Q2016, most saw price increases year on year. Villa Flora led the way with a 12% increase to RM840,000, followed by TTDI The Plaza with 8.33% to RM1.3 million, Sri Penaga with 7.5% to RM1 million, Mont’Kiara Sophia with 6.49% to RM820,000 and Cascadium with 5.26% to RM1 million.
Monthly rent also increased quarter on quarter for the majority of the sampled high-rises. TDDI The Residence saw the biggest increase, from RM3,250 to RM3,600. Rent for Sri Penaga and Marc Serviced Residence rose from RM3,300 to RM3,600 and from RM4,200 to RM4,500 respectively.
Stonor Park saw its average monthly rent fall to RM7,600 from RM8,500, as did Kiara Park and Villa Flora, from RM2,650 to 2,500 and RM2,600 to RM2,400 respectively.
Parkview Serviced Apartments saw the highest annual gross yield at 5.42%, followed by Mont’Kiara Sophia (5.12%) and Mont’Kiara Pines (5.08%).
This article first appeared in City & Country, a pullout of The Edge Malaysia Weekly, on Sept 26, 2016. Subscribe here for your personal copy.