KUCHING: Many developers have delayed their new launches and reduced sales targets in view of the softening Sarawak property market, according to a leading property consultant.
CH Williams Talhar Wong & Yeo Sdn Bhd (WTWY) said developers had experienced knee-jerk reaction in sales following the tightening measures implemented by the authorities last year and strict lending policy by banks and financial institutions to curb speculations and soaring property prices.
The tightening measures in Budget 2014 included increase in real property gain tax (RGPT) and abolition of developers interest bearing scheme (DIBS).
“Property players have noticed a market slowdown in sales. The property market for first half 2014 is showing tell-tale signs of a correction with decreased number of units launched and started compared with the same period a year ago as well as slower sales due to most property products having already beed absorbed in the past two years or so,” WTWY said in its newly-released Sarawak Property Market Review for first half 2014.
People are adopting a “wait and see” attitude.
It said property prices had surged by between 30% and 100% in the past few years, and that the good run-up since 2009 had taken a breather, with consolidation set in early this year.
“Performance for the property market for Sarawak can be said to be moderate and consolidating with transactions recorded by NAPiC (National Property Information Centre) declining by 22% in volume and 13.3% in value for the first half. This is true for almost all sub-sectors, notably agriculture by 23% and commercial by 28.8% although value increased by 5.8% and 12.6% for development land and industrial units respectively.
“Of particular interest is the residential sector which decreased by 22.8% and 20.7% respectively in terms of both total transaction value and volume.”
WTWY said despite the softening market and slowdown in sales, property prices in general had not dropped, but instead had continued to rise.
“It is obvious that strata-titled residential development, such as condominiums and apartments and some offerings of townhouses, are really catching on in major towns, especially Kuching, Miri and Bintulu, and increasing at an encouraging rate.
“This has resultantly pushed up prices of such units from less than RM300 psf a year or so ago to as high as RM600 psf in the prime areas.
“Forced by the increase in land costs and smaller-sized development land, developers find it more lucrative to build high (rise properties). This development type offers a more affordable alternative as compared with new landed houses, and is also spurred on by the receptiveness of the new generation of buyers who prefer and appreciate convenience and security.”
WTWY expects property prices to further go up with the impending implementation of the 6% GST in six months.
“Increase in property prices in the primary market due to increase in (building) materials and construction costs have helped to propel the secondary market which is comparatively cheaper. Thus, it is expected that the secondary market would be in good demand,” said the consultant.
According to WTWY, better connectively provided by the new Matang Jaya-Demak Link Road, Batu Kawa-Matang Road and Stutong-Airport Link Road here had boosted sales of residential properties in the newly opened-up areas.
“The houses in these new areas are priced quite competitively, and have seen prices comparable with those in the more established areas. As the population spreads out, new areas are opening up, serving a wider population whilst at the same time spurring further the prices of houses in the built-up areas.”
The consultant said although property players were fairly optimistic of a stronger demand in the second half year, the decline in the property market was expected to continue although new launches were anticipated to pick up.
“The lacklusture performance of the real estate sector is expected to persist as the market looks apprehensive, and more remains to be seen with the introduction and implementation of the GST by April 2015 and the possibility of a further increase in the base lending rate.
“However, some are of the opinion that the impending GST will spur earlier sales in the later part of this year to avoid the tax,” added WTWY.