Transactions down but prices rise

THE global economic and local political climates also play a role as property buyers adopt a wait-and-see approach.

THE secondary housing market is expected to remain stable and may even see a dip in transactions in the coming few months. However, prices are likely to continue rising.

"Sellers don't feel the rush or the need to sell their properties as they are optimistic about the market in general. There is also no financial push for them to sell now," says Gerard Kho, CEO of Reapfield Group.

Kho says there is a difference between the asking price and the transacted price as the asking price is often higher to allow greater room for negotiations. Should asking prices drop, it doesn't mean transaction prices will as well.

"In almost all circumstances, we have noticed that most of the properties, especially landed properties, have transacted higher than 12 months ago. The asking prices, of course, have increased in many cases beyond what the market is able to absorb," explains Kho.

Based on Reapfield data, there was a decline in transactions in the six months leading to October 2012 due to several factors.

"Mortgage approvals are traditionally lower in the latter half of the year especially in the last quarter as most financial institutions have already reached their targets. Sellers are anticipating an increase in prices in 2013 as well," says Kho.

The global economic and local political climates also play a role as buyers adopt a wait-and-see approach.

Kho says matured markets such as Bangsar and Ampang are still performing well and demand is strong, especially for landed properties in the Klang Valley, in perceived "recession-proof" areas such as Damansara Heights, Bangsar and Petaling Jaya. Demand has also held steady in the newer hot spots, such as Kota Damansara, Mutiara Damansara, Bandar Utama and Puchong.

However, he has noticed a slight dip in transactions in the matured markets. "It's because some sellers are holding firm on their asking prices and in some cases, taken their properties off the market because they anticipate that the market will improve in 2013.

"On the other hand, buyers are only willing to commit where prices are reasonable because there is a segment of buyers who feel that the market will remain stable for the next few months and don't anticipate a boom in 1Q2013," Kho says, adding that most buyers are buying for their own use.

Despite the dip in transactions, prices of transacted properties in most of these markets have continued to rise because there are few properties that are priced close to the valuation price.

"So for buyers who need to buy, they are willing to pay more," explains Kho.

He also notes that investors were more active in November, suggesting that investors are slowly coming back to the market after sitting on the sidelines.

"I think some investors, particularly the long-term players, feel that the market is currently well priced and very reasonable," says Kho.

Melawati and Ampang

In the cluster of the Kuala Lumpur city centre (KLCC) and Ampang, Kho sees Melawati as an upcoming region, with more new developments expected to be launched at progressively higher prices. He notes that some of the transactions are for terraces in newer parts of Melawati. In October, two terraced houses with built-ups of over 4,000 sq ft were sold for more than RM800,000.

"Melawati will continue to do well because of the higher value of the products that are being developed in the area. This includes high-end condominiums, bungalows, villas and courtyard homes from developers such as Selangor Dredging Bhd and Sunway Bhd," says Kho. Even though Ampang is a matured market, Kho anticipates more interest in the area in the near future based on the growing number of enquiries for properties there in the last six months.

"Ampang as a whole is underpriced when compared with areas like Petaling Jaya and Bangsar. And most portions of Ampang is within a 10km radius of the city centre," says Kho. The list on page 6 of some homes sold in the Klang Valley recently is provided by Reapfield. The sales and purchase agreements for these homes were signed between Oct 2 and Nov 19 last year.

KLCC, Ampang and Cheras as well as Puchong and Seri Kembangan recorded the highest number of transactions, while the cluster of Kepong and Sungai Buloh registered the lowest number of transactions.


This story first appeared in The Edge weekly edition of Jan 21-27, 2013.