Property buyers cautious

File picture shows people visiting a property expo in Penang. More than RM124bil worth of property was transacted during the first nine months of 2014, up 15.8 compared with the same period in the previous year.

KUALA LUMPUR: There is growing evidence of softening demand for residential property priced at RM1mil and above, as buyers turn cautious amid a rising glut in the higher end of the market.

But an expanding working population in growing cities around the country will keep demand in the affordable housing segment steady in 2015, according to speakers at the Property Market Outlook for 2015 seminar.

“The property market is expected to moderate in 2015,” said Valuation and Property Services Department deputy director-general Faizan Abdul Rahman.

“Nevertheless, the residential property market will continue to sustain, underpinned by the growing working population and first-time home buyers.”

According to Faizan, highlights of the housing market would be below RM500,000, while high-end housing priced above RM1mil is likely to wane.

More than RM124bil worth of property was transacted during the first nine months of 2014, up 15.8% compared with the same period in the previous year. Volume, however, expanded at a more moderate pace.

Rating agency Moody’s Investors Service yesterday said it expected demand for residential property in Malaysia to slow further in 2015, crimped by the property cooling measures imposed in 2013 and weak buyer sentiment.

It said developers focused on residential projects in Johor, Kuala Lumpur, Selangor and Penang would face the greatest challenge in achieving their sales targets.

“Currently, there is an oversupply of high-end condominiums and offices,” event organising chairman and VPC Alliance chartered surveyor and director James Wong said.

This was evident, he said, as property developers had been launching fewer projects in recent months. Wong also said there had been a rise in property auctions, while banks were getting stricter in approving housing loans.

“We have been seeing correctional signs since the fourth quarter of 2014. Coupled with the oversupply, we suspect this will not be a good year for the property market,” he said.

The situation as it is, according to one property consultant, is that high-end properties are aplenty, but low-to-middle-income earners are unable to buy a home due to a shortage of supply in affordable housing.

“This is where market correction has to come in. Developers’ products must be more affordable than what they had last launched,” PPC International managing director Datuk Siders Sittampalam said.

“Developers have a statutory requirement to build 30% low-cost housing,” Wong said.

“The way forward is to build affordable homes where both public and private sectors play a part.

“However, since the cost of land in KL City is relatively more expensive compared with the rest of the country, developers would not be able to produce the level of profits that they are used to if they build too many so-called affordable homes.

“Therefore, there should be more incentives provided by the public sector,” Sittampalam said.

To boost the supply of affordable housing, the Government has come out with several initiatives such as the 80,000 units under PR1MA for household incomes up to RM10,000, the 26,000 units under the National Housing Department (Program Perumahan Rakyat), 37,000 units under Syarikat Perumahan Negara Bhd and 5,380 units under the Program Perumahan Penjawat Awam 1Malaysia (PPA1M).