Penang residential property market continues to soften

The residential sector is expected to continue to lead the overall property market in Penang this year, despite a contraction in the number of transactions.

The market for residential properties in Penang has softened since the beginning of this year and is likely to continue for the rest of 2009, according to a property analyst.

Henry Butcher Malaysia (Penang) Sdn Bhd vice-president Shawn Ong told Business Times that the residential property sub-sector is set to stay as the most dominant sub-sector this year.

It comprises about 65 per cent of the total property volume, making up half of the total transaction value.

"The residential property sector has always been popular with property investors in Penang and the national All House Price Index shows that Penang's performance is above the national average but slightly below Kuala Lumpur," he said in an interview.

Ong said the residential sector is expected to continue to lead the overall property market in Penang this year, despite a contraction in the number of transactions.

However, an increase in the value of individual transactions was recorded over the same time period.

This could be due to the preference of locals and foreigners to buy more up-market property for investment and/or accommodation purposes.

"On whether this trend will continue or be a one-off phenomenon remains to be seen," he added.

In times of an economic slowdown, rising unemployment and lower disposable income, Ong noted that property will be the last thing on people's mind.

"There is no doubt that the demand for property is weak and in these troubled times, the property sector has lost its appeal."

However, as governments across the globe strategise to drive their stimulus plans, the world's economy is expected to recover and when that takes place, inflation is expected to follow and the best hedge against inflation is property.

"The Penang governments needs to draw upon policies to complement the federal government's various stimulus packages for Penang.

"In view of the current economic crisis, many sectors of the Penang are impacted as the snowball effect from the export-oriented manufacturing sector.

"The Penang real-estate sector is undeniably one of the affected sectors. However, it is during this downturn that we should take stock of the property sector in Penang and plan for the future," Ong said.

By Business Times (by Marina Emmanuel)