The condominium market will likely be hit harder than the landed residential market.
KUALA LUMPUR, March 16 — Anti-speculation measures and new supply coming into the market will slow the momentum of last year’s massive run-up in property said real estate agency CH Williams Talhar and Wong (WTW) today.
WTW managing director Foo Gee Jen also said that the condominium market will be hit harder and price growth is likely to be flat as compared with the landed residential market, which benefits from land scarcity.
Values for homes in areas like the upscale neighbourhood of Mt Kiara, which have yet to return to their previous highs of 2008, are likely to stay in that price range for the next three to four years due to ample supply of units said Foo.
Prices of residential properties in and around the Klang Valley had increased by up to 30 per cent last year but Foo said that they are likely increase by only about five to 15 per cent this year.
“If you go around new housing estates you can see 50-70 per cent are not occupied,” said Foo in a press conference following a briefing on the outlook for the property market. “I don’t think prices will come down but expectations for prices are lower than in 2010.”
The WTW chief pointed out that there were a large number of property launches in 2008 and 2009 under easy financing campaigns like the 5/95 and 10/90 schemes offered by developers and these projects will be coming online between the third quarter of this year and the first quarter of next year and this new supply would also put the brakes on prices.
He also noted that property values in 2009 and 2010 were partly driven by speculators and when the government imposed a 70 per cent cap on loan-to-value ratios for third homes in November to head off a property bubble, it helped dampen the mood.
“The 70 per cent cap has a psychological effect on speculators,” said Foo. “I think speculation will not be as rampant as last year and that’s why the price momentum will not be as strong this year.”
He also said that slower property price growth in the region of 10 per cent would be “healthier”.
“I don’t think property prices should grow at three times the rate of GDP,” he said referring to Malaysia’s 7.2 per cent economic growth last year.
Figures provided by WTW show that transacted prices per square foot (psf) in the Mt Kiara area were RM450-700 in 2010, a sharp drop from RM480-960 in 2009 and RM470-770 in 2008 respectively.
For the KLCC area, prices psf last year were RM700-1200 as compared with RM560-1,400 in 2009 and RM690-1,000 in 2008 respectively.
For Bangsar, transacted prices ranged from RM600-1,100 in 2010, while in 2009, they were RM560-800 and in 2008, RM650-810 respectively.
In Damansara Heights, the price psf was RM475-850 as compared with RM670-820 in 2009 and RM350-980 in 2008 respectively.
WTW also expects office rents to stay stable and occupancy rates in the central area of KL to soften from 87 per cent currently to between 81 and 82 per cent by 2014.
Foo said that the success of “mega-projects” such as the redevelopment of the old Sg Besi airport into Bandar Malaysia and the new KL International Financial District was a “chicken-and-egg” situation.
“The government expects the mega-projects to push the success of the greater KL plan which in turn will drive economic growth,” said Foo.
“But conventional market expectations, however, are that economic growth would support growth of greater KL and the success of the mega-projects.”
The high prices of property in KL have led to widespread complaints over affordability and the Najib administration introduced a first-home ownership scheme this month in addition to the loan-to-value ratio cap last year in a bid to stave off discontent.
The measures pale in comparison, however, to efforts seen elsewhere in the region, such as China and Singapore.
The Chinese government last year introduced curbs on foreigners buying property and raised the minimum downpayment for first-time buyers to 30 per cent from 20 per cent and banks were ordered to suspend mortgages on third homes and above in addition to hiking interest rates three times since October.
Singapore, meanwhile, raised stamp duty on new properties to as much as 16 per cent of the sale price to be paid by the seller if the house is offloaded within a year of purchase.
The amount that banks can lend for a second property has also been lowered to 60 per cent of the home’s value.