Penang’s property market is expected to contract further by double digits this year, similar to the trend in 2012, according to Raine & Horne Malaysia (Penang) director Michael Geh.
He said that both the value and volume of transactions would contract this year due to stringent bank loan conditions.
In 2012, according to the National Property Information Centre (Napic) report, total transactions of residential properties in Penang fell by 23% to 23,266 from 30,674 in 2011, while the total value of transactions was down 7.5% to RM7bil from RM7.7bil in 2011.
A report from the valuation and property services department (Penang) said the volume of residential property transactions for the first quarter this year declined by 15.7% to 4,200 units from 4,981 units a year earlier. The value of transactions during the period increased by 3.5% to RM1.54bil from RM1.49bil previously, the report said.
“Last year was the first time that there were contractions in both value and volume transactions. This hasn’t happened in the past four years,” Geh said.
Henry Butcher Malaysia (Penang) vice-president Shawn Ong also said the tighter credit conditions would continue to slow residential property transactions in the second half of 2013.
“There is still interest to purchase properties. However, due to the high and unreasonable pricing, property investors are waiting for prices to re-adjust before buying,” he said.
According to the Napic report, there was an existing stock of 367,158 units of residential properties in Penang in the second quarter of 2013, compared with 366,265 units the previous quarter.
Of the 367,158 units, some 40,843 were condominium and apartment units, the report said.
The report said that till the second quarter of 2013, there was an incoming supply of 48,076 units, while there were 45,153 units under construction.
The planned new supply in the second quarter was 46,610 units, the report added.
Geh said the existing stock of residential properties that had been built had increased, compared with a year ago, which meant that the market was spoiled for choices.
“If the incoming supply of properties that have been approved materialised at the same time, there be may be a correction in housing prices.
“Affordability is the key word here. There are many people who are keen to buy properties, but the pricing today falls out of their income range.
“Compounding the problem further is the high rejection rate of housing loans nowadays, which has increased from last year,” Geh added.
In the north-east district, current condominium prices from developers directly hover around RM800 to RM1,200 per sq ft.
“For the secondary market in the district, the prices are around RM500 to RM800 per sq ft.
“As for the south-west district, condominium prices from developers directly range from RM550 to RM900 per sq ft while for the secondary market, they are between RM500 and RM800 per sq ft,” Geh said.
According to Geh, condominium prices directly from developers have increased by about 20%, compared with a year ago in both districts, whereas in the secondary market prices have increased by over 5%, versus 2012.