A softening housing sector

The property market in Penang experienced a slight decrease in sales for the first three months of 2009, compared to the previous corresponding period, and the housing sector is likely to soften further by end year.

Although there is a drop in sales, there is no corresponding decrease in property prices.

Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat says at this juncture there were no symptoms of a “fire sale”.

“For sub-sales, some owners are asking for a lower price to attract buyers. However, current sentiments suggest that the property market will become increasingly soft by the end of 2009,” he says.

Presently landed properties in Penang are still holding firm at RM600,000 to RM700,000, depending on the location and size of the properties. Mid-end high-rise properties are still priced between RM300,000 and RM400,000 for a 1,000sq ft unit, depending on their sizes and location.

The price of super-condominiums still hovers between RM2mil to RM3mil.

The total transactions in terms of sales volume and value in Penang for 2008 are expected to be at least 20% lower than 2007, although the finance ministry had yet to release the official figures.

Teoh says the high-end category was more vulnerable to the global economic climate because the owners were now under pressure to seek suitable tenants or a divestment opportunity.

“Rental returns from the high-end properties are also rather low.

“It is now a buyers’ and a tenants’ market for the high-end property segment in Penang.

“Expatriates are now spoilt for choice,” he says.

Teoh says the mid to high-end segment was quite sustainable, due to the demand from the young population in Penang.

Real Estate & Developers Housing Association chairman Datuk Jerry Chan says the price of properties in Penang would not plunge drastically.

“This is because prices in Penang have moved upwards gradually between 7% to 10% per annum over the past five years, unlike the KLCC area where property prices doubled during the period 2006-2008,” he says.

Chan adds that developers were now dishing out free legal fees on sales and purchase agreement, free legal fees on loan, and other easy payment terms to roped in buyers during this challenging market condition.

On the mainland, there is a 20%-30% drop in property transaction for the first three months of 2009, compared to last year’s corresponding period, due to the uncertainty in the prevailing market and the caution banks are taking towards loans.

Prai-based Kington Real Agency business development manager Frankie Soon says however, there was no corresponding drop in prices.

“The single-storey terraced properties are the most popular in Seberang Prai.

“However, developers are not building that many because they are not profitable,” Soon says.

By The Star