First property transaction value decline in six years

KUALA LUMPUR: According to the latest preliminary Property Market Report released by National Property Information Centre (NAPIC), Malaysia’s property market transaction value fell by 8% to RM149.9bil in 2015. 

MIDF Research gathers that is the first decline in six years as the last decline noticed was in the year 2009 when transaction value declined 8.3%. The negative growth in transaction value is consistent with the decline in lower transaction volume which slipped 5.7% to 362,105 units in 2015. 

In the fourth quarter of 2015, House Price Index (HPI) grew 5.8% year-on-year to 227.5, significantly lower than the 5-year average growth of 9.6%. Among the key states, the slowest on-year growth was recorded in Johor (+5.6%) and Penang (+5.8%). 

Kuala Lumpur HPI growth was better at +6.4% year-on-year followed by Selangor’s +6.2% year-on-year. 

“We believe that the outlook for property price is better in Greater KL (Selangor and KL) due to the support from urbanisation factor. On a quarterly sequential basis, HPI declined for the first time since the fourth quarter in 2008,” it said in a note on Friday. 

Latest Bank Negara statistics show that “Applied Loan for Purchase of Property” fell 4% year-on-year in February 2016 to RM17.83bil. Although this is a slight improvement from the 12% drop in January 2015, it is still lower on-year. 

On a monthly basis, the data was 18% lower due to seasonally lesser property loan in February in view of festival celebrations. MIDF opines that consumer appetite on big ticket items such as property remains low due to high household debt coupled with elevated cost of living. 

The latest publication from Malaysian Institute of Economic Research (MIER) shows that the Consumer Sentiment Index (CSI) is at all-time low of 63.8 as at the fourth quarter of 2015.

The research house believes consumers are likely to continue deferring big item purchases in the near term.

It maintains Neutral on the sector with SP Setia as its top pick. “We like SP Setia due to three reasons: i) the recent confirmation of Datuk Khor Chap Jen as its executive president and CEO should remove the leadership uncertainty, ii) its final dividend of 19 sen is likely to be approved in upcoming AGM, and iii) its net dividend yield of 5.8% is higher than peers’ average of 4.8%,” it said.