M'sian Property Prices May Be Recovering: Survey

Source : The Business Times, June 2, 2009

Outlook index rises to -36% in April from its early-March low of -58%

DESPITE a property overhang and a slump in some upmarket areas, secondary-market prices for many projects in Malaysia have not fallen below launch prices, property consultants say.

And an Internet survey suggests prices may be stabilising - or even recovering.

From its early-March low of minus 58 per cent, the thinkproperty.my Property Outlook Index rose last month to minus 36 per cent.

The improvement - for a second straight month - could signal stabilisation or even recovery, says the website's chief executive and co-founder Asim Qureshi.

Adding to the feeling that the worst may be over, investors are starting to opt for shares and property over defensive fixed deposits, he says.

According to Mr Asim, the recent pick-up in the stock market, data indicating economic recovery in the United States and China and expectations that government stimulus packages will spur activity are some of the reasons Malaysians are now more positive about property.

But sentiment could change quickly.

While the stock market has improved about 20 per cent since the start of the year, the government has conceded that the economy is in a technical recession and expects a contraction of as much as 5 per cent this year before 3 per cent to 4 per cent expansion next year.

Even so, the latest thinkproperty data is the most favourable the website has seen since it began an ongoing survey in May 2008, which has since elicited more than 1,700 responses.

Zerin Properties chief executive Previndran Singhe believes low interest rates and innovative deals - such as 5 per cent downpayments and balance on delivery, with the developer bearing all other fees and interest payments during construction - have helped spur buyer interest.

'It's true that transactions have slowed,' he says. 'But there has certainly not been a crash.'

Because liquidity is not an issue, developers selling the right product at the right price - throwing in rebates, for example - have not had to agonise too much despite the economic uncertainty. For instance, a gated development of 49 courtyard homes by Tan & Tan at Sungai Buloh just outside Kuala Lumpur, priced from RM560,000 to RM800,000 (S$232,420 to S$331,960), was reportedly sold out on the first weekend, netting the developer RM37 million.

Major selling points would have included the units being landed - albeit leasehold - and that they are already completed.

Another Internet survey, meanwhile, has revealed that despite interest in property, some people consider current prices out of their reach.

According to a survey by iproperty.com, 27 per cent feel the time is right for bargain hunting; 39 per cent may buy but are waiting for prices to fall; 8 per cent are contemplating a purchase; and 21 per cent are keen but could not afford it. Twelve per cent said when they finally found a suitable property, many others were vying for it.

Zerin's Mr Singhe is quick to quash any notion of super bargains, especially in popular locations.

He expects prices to hold because there is liquidity, and reckons there will be an upturn in 2011-2012. 'People still need to invest,' he says.

And except for a 20-25 per cent drop in condo prices in the KLCC area and an 18-20 per cent at Mont Kiara, secondary transactions have not dipped below launch prices.

But he agrees that most young Malaysians - those in their 20s, especially - will find the property hunt tough going, given that incomes have generally remained stagnant over the years while property prices have risen 5-7 per cent a year.

The high-rise segment is expected to remain weak throughout this year and possibly well into next year, according to Regroup managing director Allan Soo.

But he is hopeful that a pick-up in Singapore's property market will a spillover effect in Malaysia.