THE worst is over for the residential property market and prices will remain stable or begin to appreciate this year, a report said.
The Malaysian Residential Property Outlook 2003, released by JB Jurunilai Bersekutu Sdn Bhd, concluded the current slowdown in the global and local economies would be short-lived and would not have the same impact on the housing market as the 199798 recession.
JB Jurunilai executive chairman Sultan Mydin Ibrahim said the highest demand in the market was for low- to medium-cost units priced from RM80,000 to RM180,000 in the Klang Valley, Johor Baru and Penang. For the smaller towns, prices may vary from RM35,000 to RM120,000 a unit.
Demand would be from first-time buyers starting out on their career and about to start a family.
Prices will remain stable this year, and those in the low- and medium-cost range will rise marginally in some locations, Sultan Mydin said.
Upper medium-cost units are expected to remain stable, while up-market residential properties, especially condominiums, have already shown a slight fall in prices following a drop in demand and the prevailing soft economy, he told a press conference after the launch of the company's new logo and market report by Malay Chamber of Commerce president Datuk Seri Abdul Rahman Maidin.
Sultan Mydin said the government's RM8.1bil economic stimulus package would make the property industry a major contributor to the country's economy in the next two years.
Landed properties continue to be in demand. Some developers offering exclusive housing units at prime locations have reported good sales.
The residential market has recovered from the recession, and developers are now focusing on building more affordable homes. The various stimulus measures including exemption of real property gains tax, stamp duty waiver, tax relief and savings on housing loan interest, would spur demand, he added.
He said prices had been adjusted to more realistic levels after the slowdown in demand and there was less pressure to further cut prices.
Rahman, in his speech, said one of the many reasons for the property overhang was information distortion and market disinformation.
To address the overhang situation, he said, market studies should be done to ensure the viability of a project before its implementation. He urged local authorities to consider actual demand before approving any new property projects.
He said the call by Prime Minister Datuk Seri Dr Mahathir Mohamad to state governments and local authorities to exercise prudence in approving new property development projects to curb the overhang was timely, adding that the local authorities should look at themselves as part of the big economic picture.
Private sector thinking and pulses should be inculcated in these agencies for them to function more effectively. As the full impact of the stimulus measures is expected to be felt in the next two to three months, it is timely to launch this mindset change to optimise the benefits for the industry.
There is also a need for local authorities to standardise and simplify rules and guidelines for the building industry to reduce project costs, Rahman said.
He said the current system of depending on structural plans only focused on the physical development of a locality according to how the local authorities felt it should be done; considerations of actual demand factors were ignored.
If projects are built in the right places where demand exists, there should not be any overhang, Rahman said.
He said that in some countries local authorities competed against each other to provide the best service to create the right environment and facilities to attract the right populace to their locality.
The local market is moving in that direction and the onus is on all the related parties including the state governments, local authorities, developers and the financial institutions to work in concert to ensure that the right property is built in the right location, and proactive measures are implemented to attract the people, he said.
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