PETALING JAYA: The real estate sector is likely to remain volatile in the near-term, in line with the larger equity market.
According to RHB Research, this is in light of the impending state elections and the weakening ringgit and as a result, a rebound in investor interest is only expected once the negative headwinds have passed.
Based on recently released National Property Information Centre (Napic) data, total property transaction volume increased from a low of 311,824 units in 2017 to 389,107 units in 2022, which is lower by 10% than the previous peak of 430,403 in 2011.
RHB Research said total property transaction value amounted to RM179bil in 2022, surpassing the previous peak of RM163bil in 2014 by 10%.
Meanwhile, the residential property segment also showed a similar trend where it accounts for over 60% of total transaction volume with its value also exceeding its previous peak by 15%, clocking a figure just 11% lower than the peak in 2012.
“Although the aggregate property sales in 2022 achieved by the developers under our coverage did not beat the previous high, Napic’s data does point to the vibrancy of the property market,” added the research firm.
RHB Research then highlighted that the number of residential overhang units saw a large drop by 25% year-on-year (y-o-y).
As new launches have been falling, it should be possible to keep the number of unsold units below the 30,000 threshold going forward.
“This is while many listed developers have been focusing on winding down their unsold inventory over the past four to five years, boosted also by the success of the home ownership campaigns held in 2020 to 2021,” RHB Research added.
It noted that despite the encouraging property market momentum, house prices only saw a mild growth of 1% to 2% y-o-y in 2022.
RHB Research said while concerns over property overhang play a major role in dragging house prices growth, political stability, currency strength and economic growth are also major factors affecting property valuations.
RHB Research has an “overweight” call on the real estate sector.
Its top picks are IOI Properties
Bhd and Matrix Concepts Holdings Bhd, with a buy call of RM1.46 and RM1.75 respectively.
