These secondary Malaysian markets buck the property slump
These secondary Malaysian markets buck the property slump
More transactions than the primary market
Despite a dip in overall transactions, the secondary market in Penang and Johor remained strong this year with a steady number of transactions, reported The Star.
During the first six months of 2016, the secondary market registered 5,658 transactions valued at RM2.17 billion compared with only 1,040 transactions valued at RM478 million in the primary market, said Raine & Horne Malaysia senior partner Michael Geh.
“This means the secondary market makes up 84 percent of the total transacted units for the first half of this year. When compared to the same period last year, the secondary market saw a drop of about 13 percent in transactions and 15 percent drop in value transacted,” said Geh.
He underscored that the secondary market sold more than four times in transaction over the primary market.
In the first six months of 2015, the secondary market registered 6,325 transactions worth RM2.55 billion.
“The primary market recorded 1,418 transactions valued at RM590 million in the first half of 2015, meaning it also saw a 20 percent drop in transactions and value transacted.”
Geh revealed that Penang recorded 15,291 residential property transactions worth RM6.17 billion last year.
“Interestingly, out of the overall transactions recorded last year, 77 percent are for properties priced below RM500,000. Only 16 percent are for properties priced above RM500,000 and seven percent for properties priced above RM1 million,” he said.
“This shows that Penang still has properties transacted at below RM500,000. Secondly, I would also like to point out that the secondary market has remained bullish despite the dip in overall property transactions.”
In 1H 2016, Penang’s residential property market fell by around 14 percent to 6,698 transactions valued at RM2.65 billion from 7,743 transactions valued at RM3.14 billion in 1H 2015.
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Looking ahead, Goh expects the local property market to remain flat next year.
One market observer, however, expressed hope that things may start to pick up in the last quarter of this year.
“It tends to be a little quiet in the third quarter. Generally things usually pick up in the final quarter, especially the retail sector, given the festive holidays and year-end sales during the period; but it will also depend on other variables such as sentiment, or if the central bank announced something that could affect the local property sector.”
Notably, Retail Group Malaysia (RGM) in August said the fourth-quarter growth rate of the Malaysian retail industry will remain at 5.5 percent, given the 1.3 percent growth registered over the same period last year.
Another market observer expects Penang’s rental market to remain competitive over the rest of the year.
“The investors or so-called speculators that bought properties some four to five years ago, who’s only aim was to flip it (for profit), might have problems selling the properties that are now coming into the market because of the weaker sentiment,” he said.
“Therefore, they will be eager to at least rent it out – so it’s certainly a rental market at the moment.”
Meanwhile, with a few exceptions, the property market in Johor has been subdued this year, said Samuel Tan Wee Cheng director at Johor-based KGV International Property Consultants (M) Sdn Bhd.
“Except for outstanding sales in the primary market like UEM Sunrise Bhd’s Melia Residences and the multi-billion mega development Forest City, other developers have been reporting slower sales within the state.”
Tan said transactions for projects in good locations remains steady. On the secondary market, he noted that most buyers are taking a ‘wait-and-see’ stance due to the weak economic climate.
“I think it’s a good time and opportunity for buyers and investors to come into the market. It’s not when to buy – it’s where and what to buy. That’s the maxim to follow. The good news will come,” he said.
Moving forward, Tan expects the Johor property market to remain flat next year.
“I think transaction volume and value will go down. Generally, the market has still yet to recover and is likely to remain flat next year.”
This article originally appeared on PropertyGuru.com.my on 7 November 2016
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Source: Property Report