Malaysian Property Market 2014 Report
NAPIC forecasts the property market would remain stable in the coming year
The Consumer Sentiments Index (CSI) stood at 83.0 points in Q4 2014, the lowest in the four quarters (2013: 104.3 points), as cautionary senti-ments continued to linger on household finances as well as a growing concern on employment and financial outlook. MIER’s Business Condition Index (BCI) dropped to 86.4 points in Q4 2014, due to the depreciation of Ringgit and the falling oil prices. These low note MIER’s indicators have in part influenced in the commercial property sub-sector as volume grew by a marginal 3.6% whereas value dropped by 10.5%.Malaysian economic growth was at 6.0% in 2014, higher than 4.7% registered in 2013. The positive growth in the economy supported the slight increase in the property sector, which grew at a marginal of 0.8% in market volume and 13.5% in market value. The cooling measures that resulted in the moderation of market activity in last two years have seen market corrections, which ensued the slight pick-up in market activity in 2014. Measures such as the imposition of higher Real Property Gains Tax to curb speculative activi-ties and spiralling property prices have also shown positive signs. This is evident from the moderating increase in the Malaysian House Price Index over the last three years.
PROPERTY MARKET ACTIVITY
The performance of overall property market made a marginal rebound from 10.9% contraction recorded in 2013. A total of 384,060 transactions worth RM162.97 billion were recorded, indicating a marginal increase of 0.8% in volume and 0.7% in value.
The residential sub-sector led the overall property market, with 64.4% contribution. This was followed by agricultural sub-sector (18.8%), commercial (9.3%), development land (5.5%), and industrial (2.1%). In terms of value, residential took the lead with 50.4% share, followed by commercial (19.5%), development land (13.3%), industrial (8.9%) and agricultural (7.8%).
Volume of transactions across the sub-sectors showed insignificant movements. Residential, commercial and agricultural sub-sectors recorded growths of 0.4%, 3.6% and 2.0% respectively while industrial and development land sub-sectors each recorded a slight downturn of 3.8% and 1.9% respectively against 2013. Value of transactions moved independently with residential, industrial and development land sub-sectors recorded double-digit growth of 13.9%, 17.7% and 13.5% respectively whereas commercial and agricultural sub-sectors recorded downfall of 10.5% and 4.3% respectively.
There were 247,251 transactions worth RM82.06 billion recorded in the review period, up by 0.4% in volume and 13.9% in value. Residential continued to drive the national property market, accounting for 64.4% and 50.4% of the volume and value respectively. Selangor, Johor and Perak remained the three leading states in the residential segment, each with 24.6%, 15.8% and 11.0% market share. A mixed performance was seen across the states. Seven states recorded upward volume movements whilst nine states recorded otherwise. Selangor and Perak however recorded downward movements at 5.2% and 3.0% respectively. Johor and Pulau Pinang remained on positive track, up by 15.9% and 4.0% respectively. In terms of value, all states recorded upward movements with the exception of Labuan, Pahang and Kelantan.
In the primary market, developers remained positive of the market as seen from the higher number of new launches recorded in 2014. There were 68,351 units of new launches, up from 62,376 units recorded in 2013. The rise was partly due to the high numbers of condominiums and service apartments, which formed nearly 44.9% of the new launches. Sales performance was moderate at 44.7%, amongst the better performance over the five year period. Selangor, Kuala Lumpur and Johor were the three leading states with higher number of launches, accounting for 18.0%, 17.4% and 16.8% of the total respectively. Sales performance across the board was moderate, led by Kuala Lumpur, Negeri Sembilan, Kelantan and Sabah, securing more than 50.0%.
By property category, there was a fair balance between the landed (49.7%) and high-rise (49.6%) units launched. In terms of performance, landed units achieved higher overall take-up of 34.4% as compared to 11.1% obtained by its high-rise counterpart. By type, terraced houses formed the majority of the new launches, accounted for 37.7% of the total and secured 36.9% sales performance. Service apartment was the next highest with 27.8% share but its sales performance was low at 5.5%.
The residential overhang showed positive signs as the numbers receded to 11,816 units worth RM4.04 billion, down by 12.8% in volume and 15.9% in value. However, the unsold under construction increased by 6.0% to 55,156 units. Similarly, the unsold not constructed units recorded an 8.5% growth to 15,227 units. By state, Johor continued to record the highest number of national overhang units, accounting for 30.2% of the total. Nevertheless, the numbers reduced by a slight 0.2% though value shot up by 32.4% to RM952.43 million. The state also held the highest number of unsold under construction (30.5%) and not constructed (40.8%) in the country.
Construction activities showed uptrend. Completions increased by 18.7% to 96,879 units, starts up by 6.8% to 155,667 units whilst new planned supply increased by 22.3% to 186,174 units.
The Malaysian House Price Index portrayed a moderating trend. As at Q4 2014, the Malaysian All House Price Index stood at 213.1 points (at base year 2000), an increase of 7.0% on annual basis (y-o-y) though lower compared to a higher growth of 9.6% in Q4 2013 and 12.2% in Q4 2012. The index softened slightly by 0.2% on quarterly basis.
OUTLOOK FOR 2015
The revised expected growth in Malaysian economy to 4.5% to 5.0% for 2015 is in line with the IMF’s revision of the global growth estimate of 3.8 per cent to 3.5 per cent. The confidence of Bank Negara Malaysia on the continued growth momentum in 2015 is supported by the committed investments as well as those on-going infrastructure projects, which have taken off earlier.
On 20 January 2015, the reconstructing on the annual Budget 2015 are deemed necessary so as to accommodate for the external uncertainties, shrinking crude oil prices and the depreciation of Ringgit seen in the last few months. The restructuring is to ensure that our economy remained on positive path on the on-set of strong domestic demand.
The on-going ETP projects are expected to remain supportive to the country’s economic growth. The retained infrastructure projects as proposed in the Budget namely the Kuala Lumpur – Singapore High-Speed Rail project, the Pan-Borneo Highway, the LRT 3 Project from Bandar Utama to Shah Alam, the second MRT Line from Selayang to Putrajaya as well as investment in the construction sector and the oil and gas industry i.e the Pengerang Integrated Petroleum Complex are expected to drive the private investments.
Looking forward, it is expected that property market would remain stable in the coming year given the confidence in the economic growth. The cautionary sentiments amongst developers and home buyers, in particular towards the GST implementation is to be expected. With the implementation, the interplay of market forces is expected, ensued by market readjustments in due time. The following six months post-GST is deemed as crucial for the industry to monitor the signals to indicate where the property market would be heading. Nevertheless, given the positive projection of the economy and the accommodative financial environment, property market should be able to sustain in the coming year.
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