Affordable homes pipeline expands, deals in property market flat

Source: 123rf

10 October, PETALING JAYA – Malaysian property developers are launching more residential units that are priced RM500,000 and below, but judging from the Real Estate and Housing Developers’ Association Malaysia’s (Rehda) Property Industry Survey 1H 2018, it has done little to move transaction numbers.

The survey revealed that 65% of residential units launched in 1H 2018 were priced at RM500,000 and below, which is a steady increase from 52% in 2H 2017 and 44% in 1H 2017.

For the property market as a whole, however, transactions for the period hardly budged despite fewer units on offer, with only 6,764 units sold, compared with 6,760 units in 2H 2017. Some 13,233 units (residential and commercial) were launched in the first half of the year, compared with 15,082 units in 2H 2017.

Of the 6,764 units sold, two- and three-storey terraces were the most popular with 2,858 units sold compared with 2,779 units sold in 2H 2017. The second most popular type of property sold was apartment/condominium with 2,047 units sold in 1H 2018, compared with 753 units sold in 2H 2017.

Rehda president Datuk Soam Heng Choon said the 12,522 units of homes launched in 1H 2018 were priced from RM100,001 to RM700,000, as developers are adjusting the type of properties they plan to launch.

“We hope the worst is over. If you look at the government’s call for us to launch affordable houses, you can see that the units going up are below RM500,000. We are aligning our business to what the buyer wants and what they can afford,” Soam told reporters at a briefing today.

According to the survey, 47% of the 152 respondents had affordable housing (houses priced between RM100,000 and RM500,000) components in their developments in 1H 2018 while the bulk of future launches in 2H 2018 were priced at RM500,000 and below, with launches priced up to RM700,000 in Penang and Selangor.

For 2H 2018, 47% of respondents plan to launch 15,852 units comprising 8,991 strata units, 6,433 landed homes and 428 commercial units. About 66% of respondents anticipate take-up rates of 50% or less, for the first six months after launching.

Meanwhile on the overhang in the market, the survey revealed that in 1H 2018, 75% of respondents reported having unsold stock, with the majority having up to 30% unsold stock.

Soam said the unsold units are a result of loan rejection, buyers being offered lower margin of financing and unreleased bumiputra units.

“For unsold bumiputra units, Penang and Selangor have an auto-release mechanism. We appeal to all other states to seriously look at this,” he said, adding that the condition of unsold units will deteriorate over time, making them harder to sell later.

Soam said compliance cost, which can be 15% to 20% of total cost, remained a significant factor affecting developers’ cash flow. He said lower compliance cost would directly reduce house prices.

Soam said lower compliance cost would have a much bigger impact on house prices than the sales and service tax exemption on construction services.

Rehda members said the top three incentives to encourage provision of affordable housing are lower development charges, lower land conversion premium and exemption of capital contribution.

On Maybank Kim Eng Research senior economist Chua Hak Bin’s suggestion to raise property stamp duty on foreigners, Soam questioned the impact of such a move as they make up only 3% of property buyers in Malaysia.

– THE SUN

READ MORE: REHDA: Most housing units launched in H1 2018 cost RM500,000 and below

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