KUCHING: Sarawak’s property developers have slowed down the launch of new residential projects as Malaysia reported a drastic increase in unsold completed housing units.
The country’s unsold completed residential units soared by 48.4 per cent to 30,115 units valued at RM19.54 billion as at September 30,2018 from 20,304 units worth RM12.49 billion a year ago, according to latest figures from the Valuation and Property Service Department (JPPH) National Property Information Centre (NAPIC) released last week.
In Sarawak, property overhang rose from 388 units in 2013 to 1,358 units worth RM583.7 million in 2017. JPPH defines property overhang as completed unsold units nine months after the issuance of certificate of fitness (or occupation permit in Sarawak.)
In third quarter 2018 (3Q-2018),Sarawak’s existing stock of residential units rose to 253,197 units, up from 246,893 units in 2017 and 235,685 units in 2016. Kuching Division leads with existing stock of 107,074 units (42 per cent of total) which comprise mainly terraced houses (51,770 units), semi-detached houses (15,566 units), detached houses (4,045 units), condominium/apartment (14,459 units), low cost houses (8,450 units), low-cost flats (5,812 units) and flats (3,279 units).
Banks continue to be stringent and cautious in lendings, with approval rate hovering around 40 per cent for housing loans applied. Lending rates remained fairly stable in the region of 3.62 per cent in 2017. — C H Williams Talhar Wong & Yeo
Condominium and apartment projects have mushroomed in recent years, especially in Kuching and Samarahan Divisions,as landed properties’ prices in prime locations surged to beyond the affordability of most salary earners.
Latest figures revealed the slowdown in the construction of new residential homes. During the January-September 2018 period, Sarawak’s new residential starts totalled 5,144 units or an average monthly of 571.6 units. This was significantly lower than 9,394 new starts for the whole 2017 (average monthly of 782.8 units). The 2016 new starts was 7,406 units (average monthly of 617.2 units), according to the NAPIC preliminary figures.
Kuching Division contributed the bulk or 2,839 units (55 per cent of total) of the new starts in the first nine months. These comprise 1,348 condominium/apartment units,1,223 units of terraced houses, 210 units of semi-detached houses and 58 units of detached houses.
Sibu Division ranked second with 816 units new starts, out of which more than 50 per cent or 416 are condominium and apartment units, followed by Samarahan Division with 764 new starts units, out of which 628 units or 82 per cent are terraced houses. Bintulu Division come in fourth with 280 new start units, followed closely by Miri Division 274 units.
‘It is observed that the housing affordability threshold of the average urban household in Sarawak generally remains below RM350,000. In order to increase affordability, the market could be seeing smaller units in future. ‘— C H Williams Talhar Wong & Yeo
During the first nine months, NAPIC preliminary figures revealed that 5,825 residential units were completed in Sarawak, out of which condominium/apartment units made up 2,187 units. More than 50 per cent of the 3,080
completed units are in Kuching Division, followed by Samarahan Division (1,327 units) and Miri Division (579 units).
The average monthly completed units in first nine months this year was 647.2, which was 5 per cent higher than monthly average of 616.8 units last year (total of 7,402 units for whole 2017) and monthly average of 635.7 units in 2016 (7,628 units for whole 2016).
In the July-September 2018 quarter, Sarawak’s incoming supply residential units totalled 20,857 (average monthly 2,317 units) (preliminary), with terraced houses made up 9,276 units while condominium/apartment 8,991 units. The latest figure is significantly higher as compared to 22,125 units and 21,943 units respectively for the entire 2017 and 2016 which worked out to average monthly of 1,843 units and 1,828 units respectively or up by more than 25 per cent.
On Sarawak’s house prices, NAPIC figures shown that terraced houses are priced from RM46,742 to RM728,000 while it is RM130,000 to RM865,000 for semi-detached houses and RM48,000 to RM870,000 for detached houses.
The prices of condominium and apartment units range from RM102,000 to RM872,000 each while town houses from RM100,000 to RM766,000. The low cost flats fetch between RM50,000 and RM170,000 each. In 2017, NAPIC statistics revealed that 22,605 units of properties worth RM6.19 billion were transacted in Sarawak as compared to 23,347 units valued at RM5.85 billion in 2016.
Residential properties contributed 9,620 units (42.5 per cent of total) transacted last year, down from 10,068 units in 2016 while commercial properties chipped in 1,567 units and 1,672 units respectively in 2017 and 2016. Agriculture properties transacted dropped to 9,098 units last year from 9,637 units in 2016 but that of development land transactions climbed to 1,921 last year from 1,530 in 2016 or an increase of some 25
per cent.
According to C H Williams Talhar Wong & Yeo (WTWY), the property market remained soft in first half-2018 (1H-2018).
It said the most transacted residential units in Sarawak are in the price range of between RM100,000 and RM150,000 and demand continued to be in the region of RM200,000 and below price points, accounting for nearly 50 per cent of the residential market transaction volume.
“It is also observed that more than two-thirds of the total residential volume transacted for Sarawak are below the RM300,000 price category.
“Banks continue to be stringent and cautious in lendings, with approval rate hovering around 40 per cent for housing loans applied. Lending rates remained fairly stable in the region of 3.62 per cent in 2017,” the property consultant said in its 1H-2018 Sarawak property market review and outlook.
On affordability, the report said: “Sarawak residential property is considered moderately unaffordable with a deduced median of 3.6.
“The state government will endeavour to engage with stakeholders to come up with more affordable houses below RM200,00 price range.
“The present state government’s initiative for affordable housing include the newly mooted ‘Spektra’ housing schemes like, SpektraLite and Spektra Medium which makes it mandatory on developers to build such types where the project covers more than 10 acres and Bumiputra housing units if the housing project involves reclassification of development land from native area land to mixed zone land, and fixing the prices of such
houses.”
SpektraLite houses are priced between RM100,000 and RM120,000 per unit, Spektra Medium between RM135,000 and RM168,000 per unit and Bumiputra housing units are between RM150,000 and RM198,000 per unit for such schemes.
“It is observed that the housing affordability threshold of the average urban household in Sarawak generally remains below RM350,000. In order to increase affordability, the market could be seeing smaller units in future,” said WTWY.
According to leading property developer Naim Holdings Bhd managing director Datuk Hasmi Hasnan, affordable terraced houses priced around RM300,000 each are in “very good” demand.
Naim has launched 416 units of mainly terraced houses and semi-detached houses in the Southlake zone of its Miri’s flagship development Permyjaya new township to cater for the demand. These houses are expected to be ready by 2020.
Over the next 10 years, Naim plans to build some 20,000 units of such affordable houses in the state.
On property indicators, WTWY said Sarawak’s All House Price Index had increased by 20.8 points over the last two years and 76.3 points since 2009,which is an average growth of 8.5 per cent per annum, with the highest growth registered between 2011 and 2013 at an average of 13 per cent per annum.
The terraced house has increased the most since 2009, with an average of 8.8 per cent per annum.
“Miri has increased the most for terraced house pricing over the past decade but with slowing growth in recent years whilst Kuching has registered a steeper increase over the last couple of years, probably due to limited transactions, and in prime areas only,” added WTWY.
To check the soaring houses prices, the federal government introduced several cooling measures in 2014. These measures include raising the real property gain tax (RPGT) to 30 per cent for properties disposed within three years as well as additional buyer’s stamp duty and loan curbs.
Also, the developer interest bearing scheme (DIBS) was outlawed. Developers could no longer incorporate interest rates on loans in house prices during the construction period while financial institutions are prohibited from providing final funding for projects involved in the DIBS scheme.
These measures have obviously impacted the demand for residential properties in general and led to a soften property market. Inventories for houses nationwide have built up.
To ease the property overhang, the federal government and Real Estate Housing Developers Association (Rehda) are planning to launch a national home ownership campaign in January-2019.
As part of the campaign, first-time home buyers get an exemption on stamp duty for properties priced between RM300,000 and RM1 million for a six-month period starting Jan 1,2019.
“This is a timely intervention considering the fact that this price range covers 51 per cent of total residential overhang in Malaysia as of 2Q-2018,” commented CBRE-WTW (C H Williams Talhar & Wong) in a recent press statement.
To provide a new source of financing, the 2019 federal budget announced the setting up of a RM1 billion fund by Bank Negara for first-time home buyers to purchase residential units not exceeding RM150,000 each.
Rehda members have agreed to lower the prices of new projects by 10 per cent in a positive response to the government’s move to exempt basic construction materials from the sales and service
tax (SST).
And what about the outlook for the Sarawak property market going forward? WTWY has this to say: “The market would need to tide through a period of adjustment, and clear existing stock due to the glut from previous years.2018 would be a period of corrections and consolidation.
“Property prices remain competitive and will take some time to gradually improve in line with market conditions.”
