Home Ownership Campaign (HoC) to help lift property market
KUALA LUMPUR: The Home Ownership Campaign (HoC) from Jan 1 to June 30, 2019 will help lift activities in the property market but may not parallel the achievement of the first campaign, said a property consultancy.
“The scenario then and today is very different,” CBRE|WTW managing director Foo Gee Jen told StarBiz. Foo launched the company’s 2019 Asia Pacific Real Estate Market Outlook Report the previous week.
Developers started promoting their respective home ownership campaigns as far back as November 2018. Starting January 2019, more developers have started promoting their respective campaigns.
Foo, who was involved in the first campaign which ran between Dec 12, 1998 and Jan 12, 1999 to spur interest soon after the 1997/1998 Asian financial crisis, said house prices at that time were “unlike today.”
At the close of the campaign then, total sales amounted to RM3.5bil for 19,281 units of residential and commercial properties, about a third of the total 56,338 units offered for sale worth RM15.4bil.
Like today, measures were introduced to spur demand while simultaneously curb overbuilding by developers by tightening bridging finance for properties costing RM250,000, which were then considered as high-end units. There were also measures to attract foreign buyers then.
“Coming to the present, the units which remain completed but unsold are very high, of which I would say that half of them are not what the market wants.
“They are in the wrong location, wrong price because the people cannot afford them, and wrong products,” he said.
Demand in post-Asian financial crisis era was due to declining income, poor market sentiment and job uncertainties.
If the units were to meet the criteria of buyers, that 10% to 15% discount may attract buyers. But if the products do not meet demand in the first place, that quantum of discount may not prompt buyers to part with their money, Foo said.
According to Bank Negara annual report 1998, units priced from RM250,000 onwards were considered as “high cost”.
The overhang was due to unsold condominium units and commercial properties, according to the report.
Today, as per the latest Sept 30, 2018 report by the Valuation and Property Services Department (JPPH), Malaysia’s total completed but unsold properties totalled 30,115 units, valued at RM19.54bil, compared to 20,304 units in the same period in 2017.
Including serviced apartments and small offices home offices (SoHos), the overhang would balloon to 40,916 units, valued at RM27.38bil.
Condominiums, serviced apartments and SoHos combined make up 75% of the total residential overhang although technically, serviced apartments and SoHos are built on commercial land.
JPPH defines an overhang as completed unsold units nine months after launching but before the issuance of certificates of fitness.
Foo also does not expect the property market to turn around this year, as the overhang is large and may trend further up.
It is not gloom and doom, however. Jordan Lee & Jaafar Sdn Bhd executive director Yap Kian Ann concurs with Foo that there will be some properties, in which prices and locations are in sync, which will be attractive to buyers.
Those which are near the city and easily accessible to public transport will have demand, if priced correctly.
On the issue of lack of affordable units, Yap suggested the possibility of recycling but this would involve the government.
Build and sell these units, but buyers have to re-sell them to the government without a high profit. The government can re-sell them. If the buyer rents out the place, he cannot rent it out at a profit.
“By doing so, over the longer term, developers will not need to build so many affordable units,” he said, referring to the government’s plan to build one million affordable homes over 10 year
Source : The Star
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