One of the hottest topics in town today is whether property prices in Penang will drop. Yes, there has been a decline in residential property prices — but not from the original purchase price.
At strategic locations on the island, the sub-sale price of high-rise properties has weakened since last year.
For example, the sub-sale price of a condominium unit bought for RM390,000 three years ago has already fallen to RM490,000 from RM590,000 a year ago.
In 2016, the sub-sale price of such condos is expected to remain flat or drop slightly, say some valuers and property managers.
Even new condo properties at strategic locations on the island are priced at around RM500 per sq ft, compared to RM560psf for new launches in the third quarter of 2014.
In Seberang Prai, the pricing of residential properties below RM500,000 has not increased from last year — and is expected to remain flat this year.
The volume of transactions for houses above RM500,000 has softened by about 50%, which would soon impact their pricing.
According to a report by the National Information Property Centre (Napic), incoming supply (properties under construction) of residential properties is 72,114 units or 18% of the 393,303 units in the existing stock.
Is this a lot? Technically, if close to 20%.
It is cause for alarm, say some valuers who argue that these projects will enter the market within five to 10 years. The size of the schemes and the market demand will determine the pace of entry.
However, with bank loans being difficult to obtain today, it will be hard to imagine new residential units being snapped up.
Napic figures show a total of 430 residential homes launched in the first half of 2015 for the primary market in Penang compared with 2,858 units in the same period a year ago.
Sales performance was better at 53.7% compared with 18.5% in the first half of 2014.
The Napic report also states that the residential overhang situation in Penang was less encouraging because there were 550 overhang units worth RM401.49mil, up by 3.4% in volume in 2014.
The report adds that the state’s property market performance was moderate in the first half of 2015 with 11,201 transactions worth RM6.42bil, down by 11.3% in volume and 2.2% in value against the same period a year ago.
Moving forward, the residential property market for 2016 has been forecast as ‘flat and slow’.
Although more residential units of RM400,000 and above have been planned for this year, there will be fewer launches overall due to difficulties in obtaining bridging and end-financing loans from banks. - By The Star