The Klang Valley secondary housing market in 1Q2009 was generally flat with little change in prices in most areas from the previous quarter. The property market is expected to stay flat as buyers stay on the sidelines and sellers do not feel the need to drop prices, says Regroup managing director Allan Soo in presenting The Edge/Regroup Klang Valley Housing Property Monitor for 1Q2009.
The market for high-rise homes however saw prices and rents of some high-end condos in KLCC and Mont’Kiara dipping.
“Most expectations are that the market will generally continue to be weak throughout 2009 and perhaps well into 2010,” he says. He does not expect the current spate of activity in the stock market to last as economic figures are still negative or weak.
Nevertheless, the reduction of base lending rates to 5.55% per annum by banks after Bank Negara Malaysia cut its overnight policy rate to 2% effective March 1 had resulted in a slight increase in sales enquiries and transactions in April.
“Furthermore, there seems to be some buying activity in Singapore’s property market now and this may have a positive effect on our market here,” says Soo.
Prices of landed homes on the secondary market in prime areas, such as Taman Tun Dr Ismail (TTDI) in Kuala Lumpur, were flat in 1Q2009 as sellers were unwilling to budge from asking prices.
For example, 1-storey terraced houses on Jalan Abang Haji Openg stayed firm at RM460,000 while prices for those located on Jalan Burhanuddin Helmi and Aminuddin Baki also remained unchanged from the previous quarter at between RM460,000 and RM470,000. In Bangsar, prices of 1-storey terraced houses in Bangsar Park and Lucky Gardens were resilient while 2-storey terraced houses in the Terasek area maintained at around RM880,000. In Bandar Utama, Petaling Jaya, 2-storey terraced houses in BU1 and BU12 stayed firm at RM530,000.
Likewise, there were no major changes in prices for 2-storey terraced houses in Subang’s USJ6 (RM240,000) and USJ4 (RM300,000), as well as 2-storey terraced houses in Bandar Sri Damansara(RM400,000), in Puchong Jaya (RM280,000) and in Pusat Bandar Puchong(RM300,000).
However, 2-storey terraced houses on Jalan Athinahapan in TTDI experienced a 3% spike in prices to RM700,000 in 1Q2009 from RM680,000 in 4Q2008.
Rents of landed homes in certain areas have dipped slightly in 1Q2009. Rents for 1-storey houses in Bandar Kinrara edged down by 6.7% to RM700 per month from 4Q2008’s RM750, while those in Puchong Perdana were down by 7.7% to RM600 per month from RM650. Even 2-storey terraced houses in TTDI and Bangsar recorded lower rents during 1Q2009 as these areas were experiencing lower demand from the expatriate market. Similar-type houses in USJ 6 also recorded a drop of 8.3% and 5.9% in rents.
Similar homes in BU1 maintained rents at RM1,400 per month. Rents of 1-storey terraced houses in TTDI, Bangsar Park and Lucky Garden were resilient at between RM1,300 and RM1,400 per month.
Prices and rents of high-end condominiums in KLCC continue to fall due to sluggish demand. There were, however, a few transactions during 1Q2009 at lower prices. Some transactions, such as at Binjai Residency, were concluded at between RM820 and RM850psf compared with RM1,200 to RM1,400 psf in Q12008 (30% drop y-o-y). A unit in K Residence was sold at about RM800psf in Q12009 compared with RM1,500 psf in 1Q2008 (50% drop y-o-y).
“Prices are expected to drop further as the market is expected to continue to weaken for a while. Support level is probably going to be where we were in 2005 or around RM600 to RM700 psf for many of those units which are transacting above RM1,000 psf now.
“There is a perceptible increase in transactions in Singapore now for condominiums there and this may perhaps raise some confidence in the local market later,” says Soo.
From a sample study in KLCC, average rents of high-end condos there have dropped about 10% in 1Q2009 compared with the same period a year ago.
In Mont’Kiara, high-end condominiums are facing a slight drop in prices and rents, especially for new units. Older condominiums here continue to show resilience with prices and rentals staying firm. Mont’Kiara Sophia, for example, still fetches RM2,800 per month for a 1,200 sq ft unit.
With about 1,500 condominium units to be completed this year in the KLCC area and about 2,000 units in Mont’Kiara, the additional supply may affect prices further as some sellers may become more desperate, Soo offers.
The condo market in Bangsar was more active than in the previous quarter with well-located and well-maintained condominiums in Bangsar experiencing a hike in prices and rents. For example, Cascadium saw an increase of 4.46% in transaction price to RM585,000 in 1Q2009.
High-rise residential markets in suburban areas were still holding quite well in 1Q2009. Medium-cost apartments and condominiums in Subang Jaya/USJ and Bandar Sri Damansara were unchanged in prices and rents.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 757, June 1 – 7, 2009.