The survey — held from January to June this year — was carried out by REHDA to assess the property market performance for 1H2016, the property market outlook for 2H2016 and the sentiment of developers about 2H2016. A total 157 members from REHDA across Malaysia participated in the survey.
Fateh noted that developers are adapting to the current market demand by homebuyers and have launched properties which are more sought after in this challenging market.
“Properties priced below RM200,000 have increased nearly two and a half times, taking up a market share of 14% in 1H2016 as compared to 6% in 2H2015. Developers have also scaled down the launches of properties priced above RM1 million. In 1H2016, only 7% of properties in the market were priced above RM1 million while in 2H2015, that figure was 17%,” said Fateh.
He also remarked that there has been a shift of product type in the market in 1H2016.
“2-3 storey terraced houses dominated the demand from homebuyers in 1H2016 as compared to 2H2015 where apartments and condominiums took the lead. Sixty five per cent of the residential units launched in 1H2016 were landed homes as compared to 49% in 2H2015,” Fateh added.
Out of the 6,939 units of residential homes launched in 1H2016, the bulk of the launch were 2-3 storey terraced homes with 2,345 units launched followed by 1,550 units of apartments and condos and 1,022 units of low cost house and flats.
Two thousand, seven hundred and thirteen units of residential homes were sold with the 2-3 storey terraced houses placing first at 1,473 units followed by 548 and 267 units of apartments/condos and serviced apartments sold respectively.
Fateh noted that developers with terraced-home projects priced below RM500,000 are optimistic about the market in 2H2016.
“They [the developers] know that these are the house that the market is looking for and they know that there will be demand for the project after it has been launched,” said Fateh.
Meanwhile, in a different market segment, despite some 1,022 units of low-cost house and flats launched in Ulu Tiram and Tebrau, Johor in 1H2016, none were sold since the commencement of sales in Aug 16, Fateh added.
“Nowadays, homebuyers do not like to be associated with the description “low-cost housing”. It is not that the developers are not launching low-cost houses and flats. There was even an increase from the 914 units launched in 2H2015 and 650 units launched in 1H2015, yet there was zero sales [in Ulu Tiram and Tebrau],” said Fateh.
As for the commercial sector, there was a 30% decrease in the launches of commercial units in 1H2016 (233 units) compared with 2H2015 (331 units).
“However, about 32% of commercial properties priced above RM1.5 million came into the market in 1H2016 as compared to 0% in 2H2015. I do not think that people do not have money to buy properties. Instead, this is a sign that the level of confidence of buyers has dropped. We see that our gross domestic product growth was about 4% in the 1H2016. The numbers do not show that the economy has slowed down. Property is a big ticket item and buyers are just more cautious now,” Fateh added.
According to REHDA, properties priced from RM500,001 to RM700,000 faced the highest loan rejection rates.
About 24% of respondents agreed that properties in the price range of RM500,001 to RM700,000 faced the highest rejection rates, followed by 23% of respondents for properties in the price range of RM1 million to RM2.5 million, 21% of respondents in the price range of RM250,001 to RM500,000, 19% of respondents for properties in the price range of RM700,000 to RM1 million, 7% of respondents for properties in the price range of above RM2.5 million and 6% of respondents for properties in the price range of RM100,001 to RM250,000.
“Again and again, end financing is the issue for homebuyers today. As you can see from the figures, the bulk of properties which faced rejection rates are the properties in the RM500,001 to RM700,000 price range which are mostly the homes that first time homebuyers and first time upgraders are buying. Those who are buying the RM2.5 million and above properties are not those who need financing because they can afford it,” said Fateh.
Fateh noted that the buyers’ profile showed that the bulk of them in 1H2016 were home upgraders and first time homebuyers contributing to 45% and 34% respectively, followed by investors and companies.
“More than half (53%) of these buyers are buying for their own stay, followed by 21% of them buying to upgrade their homes and 16% of them are buying for family members. Only a fraction or 10% of the purpose of purchase is for rental yields,” said Fateh.
“Almost 90% of them are end-users. They are not buying to speculate and only a small number of investors are buying to rent. Maybe in 2010, you can get a rental yield of 6% to 6.5% in hot areas like KLCC. Today, rental yields may be below 5% in these challenging times,” Fateh added.
Some of the financing issues include the credit history of homebuyers, ineligibility of the buyers’ income, lower margin of financing, bank requesting more documents and limited quota for low-cost and affordable housing.
Commenting on the high household debt of Malaysians which has risen from 86.7% last year to 89.1%, Fateh noted that is vital to differentiate good and bad debt.
“About 40% of the debt [of Malaysians] comprises mortgages, while others are automobile loans, credit cards and personal loans. Unlike in a country like Australia, mortgage makes up almost 75% of their household debt. Household debt, today, will create value in the future as property prices will increase,” said Fateh.
Out of the 157 survey respondents, 108 noted that they faced end-financing problems while the remaining 49 did not.
Fateh said the recent proposed end-financing scheme by property developers should only be given to first-time home-buyers and only for affordable houses priced at RM500,000 and below.
He said the end-financing by home-builders is ultimately to help first-time buyers bridge the gap in the funds needed for the initial payment.
However, only developers with strong balance sheets could give the facility to home-buyers and they were not many of them, he said.
News Source: The Edge Property, 14 September 2016