In Penang, there has been a public concern on whether the property market is overheated and besides increasing prices, there is currently an oversupply of properties on the island. Kevin Singham, Director of Reapfield Properties (PG) Sdn Bhd shares with iProperty.com about the property market in Penang this year.
1. How has the property market fared in 2015 for the primary and secondary properties in Penang?
Compared to 2014, there is definitely a dip in the property market for both the primary and secondary properties in Penang. According to NAPIC’s latest data, there is a 14% drop in the number of residential properties transaction in the first half of 2015 from the same period in 2014 in Penang. Many prospective buyers adopted the wait-and- see strategy, giving the real estate industry in Penang a tough and challenging year.
2. The weakening Ringgit and the GST have affected the property prices in other states. How much has it affected the property prices in Penang?
If you analysed NAPIC’s data, despite the drop in the number of residential transactions of 14% during the first half of the year, the decrease of the transacted value is only around 2.8%. The weakened Ringgit, implementation of GST and other factors such as the state imposed levy as well as the stringent bank loan approval, have definitely affected the property prices in Penang. However, I believe that the current property prices reflects a much fairer market price as compared to before. The drop in transacted value is a mere adjustment of the price to a fair market price.
3. Will Penang face a property glut with the abundance of newly built high rise condominiums?
It is already something that is happening in Penang. Most purchasers of those high rise condominiums already have a place to stay. Some even own more than 2 properties. This is one of the reasons why newly completed projects are mostly empty and takes some time for them to be fully occupied. Presently, we have a far larger residential property supply compared to demand, making the present market more favourable to buyers compared to the sellers.
4. What are the challenges faced by the Penang state government in implementing affordable housing?
There has been a few launches of affordable housing projects in Penang and the take-up rate has been relatively slow despite the attractive pricing. One of the reasons is the stringent housing loan approval imposed by banks. There has been also calls by the public to relax the criteria in purchasing an affordable house so as to give more buyers an opportunity to own an affordable home. I believe that the state government is looking into this. Hopefully, some measures will be taken to make the implementation of affordable housing a success.
5. What are the emerging property hotspots in Penang?
Most of the developable lands in Penang Island are already urbanised. I believe that the south-west of Penang island is still an area to look at moving into the future. As for the mainland, I foresee that the emerging hotspots will be at Perai, Simpang Ampat and Tambun.
6. What is your property market outlook for Penang in 2016?
I expect the Penang property market to pick up in 2016 and I believe that once the investors and purchasers acclimatise to the current market situation, business will be back as usual. Purchasers will definitely be extra cautious and only look for properties at the right location that offer the best value. In general, I believe that it will be a better year for the real estate industry compared to 2015.