Strong demand for homes RM500K above in 2012, says NAPIC

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DEMAND UP: Demand for residential units priced above RM500,000 continued to expand amid average take-up rates of about 50 per cent for overall new residential launches in 2012, says NAPIC

Upward trend
Last week we reported the phenomenal prices some luxury penthouses are fetching in the KLCC area that raised eyebrows in the property market. Some are even predicting that prices could go up to RM5,000 per sq ft in a few years‘ time.

Since the second half of last year when the market went a bit slow, many experts in the property industry were predicting a drop in sales and prices amid a big overhang due to large oncoming supply of condominiums and office buildings. A property consultant even predicted a possible crash in the secondary market due to a slew of lending restrictions. However, data recently released by the National Property Information Centre (NAPIC), Valuation & Property Services Department, Ministry of Finance Malaysia for 2012 suggests that despite the overhang and a lower volume of transactions, the value of transactions have in fact gone up.

Based on NAPIC‘s Malaysian Property Market 2012 report, trends in the property market seem to bear the fact that upscale property units are being much sought after. For the past four consecutive years, demand for high-end residential units has been on an upward trend. Units priced above RM500,000 continued to expand to 26,484 transactions, compared to 2008 (11,266), 2009 (12,121), 2010 (16,782) and 2011 (21,905), according to the report.

Mid-range homes priced between RM250,000 and RM500,000 were the most popular, capturing the largest share with 18.2 per cent (49,515 transactions) and a volume growth of 16.4 per cent compared to 44,215 transactions in 2011.

Interestingly, despite the demand for affordable housing the NAPIC report indicates that residential property transactions at the lower price range had dropped in 2012 with transactions of homes within RM25,000 to RM150,000 declining between 3.5 per cent and 8.3 per cent. Similarly, transactions of houses in the price bracket of RM200,000 to RM250,000 dipped by 2.5 per cent.

Marginal growth
The NAPIC report shows that the volume of transactions for all types of properties slowed down slightly last year. It indicates that there were 427,520 transactions worth RM142.84 billion registered in 2012 against 430,403 transactions worth RM137.83 billion in 2011. This translates to a 0.7 per cent dip in volume which however is accompanied by a 3.6 per cent increase in value.

The residential sub-sector recorded a much lower growth of 1.1 per cent after recording a double-digit growth of 18.9 per cent the previous year. Nevertheless, with 272,669 registered residential property transactions, the residential sector continued to lead the property market with a 63.8 per cent share and 47.4 per cent of transaction value worth RM67.76 billion. As at Q4 2012, the All House Price Index increased to 175.3 points against 161.9 points registered in Q4 2011.

Market activities softened across the board except for residential and development land sub-sectors. After the residential sub-sector, other leading property sectors by market share were agricultural (18.9 per cent), commercial (9.6 per cent), development land (5.4 per cent) and industrial (2.3 per cent). Development land sub-sector grew by 6.1 per cent after achieving 14.8 per cent the previous year. Commercial, agricultural and industrial sub-sectors were less encouraging registering -5.9 per cent, -5.0 per cent and -4.7 per cent contraction respectively against growth of 9.7 per cent, 4.6 per cent and 6.5 per cent in the previous year.

More new launches
Property developers continued to be aggressive with new property launches although economic conditions had softened in both local and global markets. The report indicated that 57,162 new units were launched in 2012 compared to 49,290 units in 2011 and sales increased to 47.7 per cent compared to 46.3 per cent in 2011.

Kuala Lumpur, Selangor, Johor and Perak were the main contributors with 62.1 per cent (35,498 units) of the nation‘s total new launches. Six states registered performance above the national average. Kuala Lumpur led with 59.5 per cent of total sales followed by Pulau Pinang (56.4 per cent), Melaka (50.7 per cent), Kelantan (49.9 per cent) as well as Negeri Sembilan and Selangor, both at 49.2 per cent.

By type, terraced units formed 39.7 per cent (22,717 units) of newly-launched houses, comprising 8,466 single-storey terraces and 14,251 units of two to three-storey terraces. Of the total terraced units launched, 10,537 units were taken up, registering an overall take-up rate of 46.4 per cent. Condominium and apartment units made up 38.9 per cent (22,205 units) of total launches with sales of 55.1 per cent.

Overhang reduced
According to NAPIC‘s report, an overall improvement in the primary market led to a reduction in volume of residential overhang units. The overhang volume reduced from 19,607 units to 15,091 units, down by 23.0 per cent while value dropped by 3.5 per cent to RM4.74 billion.

Analysed state by state, Putrajaya and Labuan were notable for being overhang-free while Selangor and Kedah showed incremental overhang figures. Other states posted lower overhang numbers compared to the previous year. Johor had the highest number of overhang in the country although it has been reduced significantly by 31.2 per cent in volume to 3,552 units and 28.0 per cent in value to RM662.43 million.

For the unsold under-construction category, Selangor led with 9,574 units (40.4 per cent increase), followed by Johor with 9,241 units (33.7 per cent increase). For the unsold not-constructed category, Negeri Sembilan topped the list with 2,931 units followed by Johor with 2,784 units.

The report also indicated that 32.0 per cent (4,828 units) of the overhang units were in the price range of RM50,000-RM100,000. Around 70.7 per cent (3,413 units) of the units were flats and single-storey terraces.

Condominium/apar tment units were predominant in the overhang category with 21.1 per cent (3,186 units) of the total. Close to 40.0 per cent (1,252 units) of the condominiums/ apartments were within the price range of more than RM1 million and more than 50.0 per cent (685 units) were in Kuala Lumpur. For the unsold under-construction category, terraces formed the bulk with 35.3 per cent (17,837 units) whilst condominiums/apartments formed 25.0 per cent (12,651 units) of the category. In the unsold not-constructed category, detached houses dominated with 25.0 per cent (3,124 units) of total overhang units.

 


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