BY EUGENE MAHALINGAM

Media conference: Chua (right) at a press conference after the launch of the NAPIC report. With him are NAPIC director Khuzaimah Abdullah and Valuation & Property Services Department director-general Faizan Abdul Rahman.

PUTRAJAYA: There will be fewer new property launches this year in light of the softening market and bleak household sentiment.

According to the National Property Information Centre’s (Napic) 2015 Property Market Report, the number of new launches fell to 70,273 units, down by 19.2% against 2014 (88,997 units).

However, Deputy Finance Minister Datuk Chua Tee Yong expects more demand for affordable homes, namely those below RM500,000, despite the slowdown.

“About 80% of transactions last year were for homes below RM500,000 and we expect more demand for such properties,” he told reporters following the launch of Napic’s report.

According to Napic, major states such as Johor and Penang saw substantial declines in new launches, down by 42.8% (9,428 units) and 47.5% (2,348 units), respectively.

“The overall sales performance for the country hovered at 41.4% (29,089 units sold), lower than the 45.4% (39,491 units sold) performance in 2014.”

Napic added that Kuala Lumpur, Selangor and Johor remained the main suppliers of new launches with a 20.6%, 18.2% and 13.4% share.

“By property type, condominiums and apartments formed the bulk (27.7% share), followed by two-to- three-storey terraced houses (25.3%).”

Echoing Napic’s report, Chua said the residential property sub-sector would be experiencing further softening in 2016 in view of the various internal and external uncertainties.

He said the commercial sub-sector would moderate, while the office market would plateau this year.

Napic, in its general outlook for the local property sector in 2016, said the economic and financial environment (both local and global) would be even more challenging this year.

“This has led to the calibration of Budget 2016 to ensure that our country remains firm to brave the forthcoming uncertainties.

“In view of the downward gross domestic product revision by both the International Monetary Fund and Bank Negara, the situation is expected to remain the same in 2016.”

Napic said Fitch Ratings’ reaffirmation of Malaysia’s sovereign at an “A-” rating with a stable outlook would have some bearing on the confidence level of the business environment.

“On a cautionary note, the agency also indicated some (negative) points, namely, fast growth in household debt, high indebtedness of the private sector, the weakest credit growth (since 2009) as well as weak governance.

“All these factors will have an influence on the behaviour of market players at large, the real estate industry, in particular, buyers’ sentiment and business confidence.”

According to Napic data, the residential overhang situation took a downturn in 2014.

“There were 11,316 overhang units worth RM5.9bil, up by 16.3% in volume and 56% in value. Johor, which held 21.9% of the national overhang, saw its overhang increase to 2,483 units, up by 8.5% due to higher unsold terrace and serviced apartment types.”

Chua expects an overhang increase in 2016.

“Yes, if the market continues to propose high-end properties, which will have slower take-up rates, we believe there will be an increase in overhang compared with 2015. But hopefully, it won’t be significant.”

Napic also said the number of unsold units under construction recorded an increase of 28.6% to 68,760 units due to large numbers of unsold condominium and service apartment units.

“The fewer number of new launches partly helped contain the unsold units.”

Terraced houses formed the bulk of the overhang units, said Napic, which accounted for 39.9% (4,519 units) of the total.

“Most were concentrated in Johor (1,194 units; 26.4 units). As for the unsold under construction category, service apartments outnumbered other types, accounting for 27.9% (19,192 units) whilst the constructed category saw condominiums and apartments dominating, accounting for 41.1% (4,397 units) of the total.”

In terms of price movements, Napic said the Malaysian House Price Index sustained its moderating trend last year.

“As at the fourth quarter of 2015, the Malaysian All House Price Index (MHPI) stood at 227.5 points (at base year 2,000), up by 5.8% on an annual basis.

“The annual rate of increase for MHPI has been on a decelerating trend since the fourth quarter of 2013, resulting from the various cooling measures to contain the spiralling prices.

“On quarterly movements, the index points contracted by 0.8% against the third quarter of 2015.”

In terms of rental, Napic said rates in Kuala Lumpur generally showed an upward trend.

“The increase was noted in prominent schemes as well as those located in the light rail transit and mass rapid transit routes,” according to the report.