Property market remains soft in Q1

PETALING JAYA: The soft market conditions last year continued to plague property developers in the first quarter of this year, driving them to come up with “creative” initiatives in order to attract buyers.
“The market is still flat. What we have seen in the first quarter is that some developers are delaying their launches. They are trying to move whatever stock that is still available, and we have seen Sunway Group, IOI Properties Group Bhd, Kuala Lumpur Kepong Bhd and others coming with very creative financing packages,” said CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen.
“Definitely we see that trend coming to circumvent the fact that loans are getting tougher (to secure). So developers are actually offering a so-called olive branch to all these people,” he told SunBiz.
Sunway is offering up to 88% financing to home buyers under its “Sunway Property Certainty Campaign” for purchasers who book and sign the sale and purchase agreement from March 29 2016 to Sept 30 2016. Under the campaign, the company will offer financing from its internally generated funds as an option if buyers are unable to obtain financing from banks.
Meanwhile, IOI Properties is offering a deferred payment scheme to help those who are unable to meet the lump sum down payment by allowing them to pay the down payment in instalments over 18 to 24 months.
Another developer, Tropicana Corp Bhd, also got creative when it recently launched its “Just Bid It!” campaign, whereby buyers get to put a price tag on the property they are interested in but with a starting floor price set by the developer.
Foo said property developers are using these methods to help buyers purchase homes and such schemes provide a level of certainty to buyers, especially with the current market sentiment.
“There are a lot of industries now pulling back and VSSs (voluntary separation schemes) are coming. Tesco just announced some retrenchment and streamlining of their staff and so forth. I think you can see that coming, which definitely will put a lot of pressure (on the property market).
“Some developers are indirectly also giving discounts, in many other forms. That is the only way to push the unsold stock that’s available,” he added.
Foo does not expect the current situation to improve much in the second quarter and foresees 2016 to be a “flat” year due to a worrying job market and other uncertainties.
He said developers with good track records and good products will still be able to rake in sales this year but overall, the property market will continue to be slow with some developers possibly not meeting their sales targets this year.
Malaysian Institute of Estate Agents immediate past president Siva Shanker said all sectors of the property market were down in 2015 compared with 2014, with transaction volumes and values both falling.
The latest preliminary Property Market Report released by the National Property Information Centre (NAPIC) showed an 8% drop in the nation’s property market transaction value, to RM149.9 billion in 2015.
The decline is the first in six years, as the last drop recorded was in 2009 when transaction value fell 8.3%. The transaction volume also fell last year, by 5.7% to 362,105 units.
“The market is very quiet, there was not much activity at all in the first quarter this year. In January, estate agents told me that things were looking better than in December but that’s probably because December is usually a quiet month. January marks the new year and perhaps there was new enthusiasm, but I think it has died down already. Recently, estate agents have been telling me that things are really quite bad,” Siva told SunBiz.
He said the current political climate is an added pressure on the market, which is already affected by uncertainties, including the ringgit and oil price.
Siva said investors will be spooked unless the situation improves and this can already be seen by estate agents who noticed a sudden surge of interest in overseas foreign properties among Malaysians, despite the depreciation of the ringgit.
“Because of the currency, it should have been less isn’t it? But estate agents are telling me that their last few launches didn’t do too badly. They didn’t do fabulously but they didn’t do too badly either. I believe there is a fresh shift towards the really rich and wealthy people putting their money away from the country to hedge their bets,” he added.
Siva maintained his forecast of a flat 2016 with the first half of the year being in negative territory.
“In the second half things may recover slightly or it may be flat. My projection is that total for the year will still be on a minus. I think the knee-jerk reaction will be over in 2017 and 2018 I think we will see the market recovering,” he said.