Huh? Property prices up 5-8 percent in 2016?

Sometimes I really do wonder what is really happening with the property market. I have many real examples showing that real estate negotiators are struggling. Some are now UBER driver, some have found new jobs and many are themselves negative about the market. A few people told me that the rental is also falling and one colleague took months to rent out his landed home in a mature neighbourhood despite agreeing to a lower rental from his wanted asking price. Suddenly, now news report are quoting some experts saying that property prices would be rising in 2016? Transactions are falling and prices are rising?

In their property market review, Rahim & Co Chartered Surveyors Sdn Bhd director Sulaiman Akhmady Mohd Saheh said that he expects prices to rise and expects marginal price gain for the residential sector. The increase would be between 5% and 8% this year, compared with 7% to 10% last year. He said, “Depending on location and type of property, some may see price consolidation as the gap between sellers’ asking prices is closing towards the buyers’ expected prices.” So, the prices are CLOSER to the buyers’ expected price. He said that due to the slower increase in property prices versus the average annual household incomes, the housing affordability for terrace homes improved slightly last year.

I think the assessment is true enough. Sellers are definitely not as desperate as what we believe them to be, at least majority of them and currently. A colleague viewed many units of a condo recently and chose to offer one unit at RM600k instead of the selling price of RM650k. The seller offered RM640k and nothing else. My colleague will continue to view more units from the same project and the seller has yet to call back with a lower offer. Another colleague wanted to buy a landed property in Sungai Besi and asked for abetter price from the seller, a lady. She refused and my colleague has since bought another bigger unit for slightly higher price, RM2.1 million. The property market is alive and well for those who has deeper pockets and has a need for a home.

 

According to Rahim & Co Chartered Surveyors Sdn Bhd executive chairman, Tan Sri Abdul Rahim Abdul Rahman, “The ratio improved from 3.6 in 2014 to 3.4 last year, which indicates that an average terraced house would cost an average household or family in Malaysia 3.4 times its annual gross income.” Ratios in other states are as follows: 5.7 times ratio for Sabah, 5.3 times for Penang, 5.2 times for Kuala Lumpur and 4.5 times for Sarawak. These ratio showed that the house prices are moderately unaffordable and for Sabah, Penang and Kuala Lumpur, average prices of terraced houses are even categorised as severely unaffordable.

Personally, I always think the current slowdown is a good thing. It makes everyone, from sellers to buyers and even developers to think more rationally. Need to sell? Then, be less greedy. Need to buy? Then be open to more choices, further away.  It gives some time for more affordable units to be completed as well. It should at least stem the property price increase for the medium-end ones. As for the luxury ones, it’s very clear there is now an oversupply in KL. Read here: Luxury condominiums oversupply in Kuala Lumpur  Let’s wish for a more resilient property market Malaysia instead of a speculative one.

written on 5 Feb 2016

Next suggested article: Developers are unlikely toreduce prices drastically? True, but.

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