15 June 2015

With loans hard to come by, Kota Kinabalu’s real estate market in doldrums

  15 June 2015

KOTA KINABALU, June 15 — Property launches here have ground to halt as some buyers struggle to secure financing amid stringent lending conditions while others remain wary over the fallout from the Goods and Services Tax (GST).

The situation was also exacerbated by a shortage in the low- and mid-range segment where interest in highest, leaving developers with far fewer units that buyers are clamouring and a surfeit those they are struggling to buy.

According to Knight Frank Malaysia (Sabah branch) associate director Ginn Lai, the local property sector came to a near standstill in the past six months, with few property launches and no large-scale projects taking place.

“The first half of 2015 remained relatively stagnant with no significant new developments being released to the market. Transactional activity was largely limited to secondary market properties and balance units in projects under construction,” he said.

Lai said this was because demand was being pent up by difficulty in securing mortgages, and believed sales would recover if lending rules were relaxed.

In a move to curb spiraling household debt, Bank Negara Malaysia pin in place two years measures including banning pre-approved loans by housing developers, which previously allowed many Malaysians to buy properties outside their affordability.

The measure, along with stricter guidelines on a borrower’s aggregate credit repayments, made it harder for banks to approve housing loans or other loans, for that matter.

While the impact of the measures were not immediately apparent, difficulty in financing is a growing refrain within the property sector today.

A property exhibition here in March — one in a series across main cities in east Malaysia — saw half as many sales from before, more signs of the softening market.

“Sales has gone down by about 50 per cent in all markets. Luxury residential units upwards of RM800,000 are the worst hit while medium range products between RM400,000 and RM800,000 were still in demand provided packages were attractive,” said PH expo organiser Elson Kho.

Although demand for low- to medium-cost apartments was high, there was a distinct lack of supply with only five out of over 70 properties on offer during the expo costing below RM300,000.

“But in general, sales have slowed down in all sectors at every event compared to previous years.

“From a market survey we did, there are still interested buyers but many are waiting it out to see the dust from the GST settle and for the economy to stabilise,” said Kho.

Lai also agreed that there is dormant activity, but said the weakened ringgit has stimulated foreign interest, particularly for luxury properties priced upwards of RM 1,000 per square foot, as well as prime location property in the city.

Despite the glum outlook, however, figures from the National Property Information Centre (Napic) showed only a marginal drop in residential property transactions in the first quarter of 2015, going from 1,298 to 1,286 while overall value increased from RM409 million to RM426.3 million.

Based on the Property Market Report 2014 by the Valuation and Property Services Department, there were 8,926 transactions in Sabah last year with a combined transacted value of RM4.36 billion or a two per cent decrease from 2013.

Four in five of transactions were priced below RM500,000 and only 6.7 per cent were priced at RM1 million and above. Most of the transactions were from the residential sub-sector

The research arm of Sabah Housing and Real Estate Developers Association reported that despite the current turbulence, the property market will bounce back in the upcoming year with friendlier and “less harmful” measures announced in the Budget 2015.

“The measures, which include building more affordable housing for low income groups and civil servants along with loan and financing schemes, will spur the market and provide more opportunities for growth in their respective sectors,” it said in its report.

Lai contended that until lending conditions improve, however, Sabah’s property market will remain stagnant even with several new developments in the second half of the year and if the general economy is not stimulated.

“The outlook on retail will very much depend on tourism arrivals and consumer spending habits going forward. The additions of Oceanus mall and Imago mall have significantly increased retail shopping centre space in Kota Kinabalu and it is yet to be seen whether this will be sustainable,” he said.

- See more at: http://www.themalaymailonline.com/malaysia/article/with-loans-hard-to-come-by-kota-kinabalus-real-estate-market-in-doldrums#sthash.G1ifzKn4.dpuf

Thanks for reading With loans hard to come by, Kota Kinabalu’s real estate market in doldrums

« Prev Post

No comments:

Post a Comment