Property market yet to pick up
09/04/2007 NST By David Yeow

Developers say people don’t want just any house, they want a home. A quality environment that will guarantee profit when resold.

KUALA LUMPUR: Sluggish, flat and dry. These three words, property dealers say, sum up the current state of the local property market.

Gone are the days when the queue in front of sales offices would start the night before a launch with buyers clenching cheque books in their fists and praying hard to secure a property for themselves.

According to the National Property Market Status Report, as of the second quarter of 2006, there are 22,185 units of unsold residential property.

"The property market has changed. It’s an investment market now," said VPC Realtors Sdn Bhd director James Wong.

He said the decline in property sales was due to the quality of the property.
"People don’t want just any house, they want a home. A quality environment that will guarantee profit when resold," he said.

Wong said the reason for the decline in property sales was partly due to an oversupply of low-range property, with a combination of factors like poor location, price inflation and lack of facilities.

Real Estate and Housing Developers Association chairman Ng Seing Liang said the current property market had an excess supply of the wrong types of property.

"There are a lot of properties in the range of RM250,000 that are not selling because people think there is no long-term value in them," he said.

Ng said the stagnation was also caused by a lack of first-time buyers.

"Currently, a lot of young working adults cannot afford to buy anything above the range of RM350,000," said Ng, who believed that sales would be stimulated if the government were to set up a fund to help first-time buyers.

Similarly, he said the government’s doing away of the real property gains tax (RPGT) from April 1 was a move in the right direction.

However, Patrick Yap, a financial planner with American International Assurance, disagreed, saying the problem stemmed from the fact that the cost of living had increased but the average wage had not.

"An average housing loan is a 30-year commitment with a repayment of close to RM1 million including interest payments. Considering the uncertainty of world economics, it is just too much for young adults to complete their loan," he said.

Yap said the economy needed to see a long-term boost before property sales could bounce back.

Property surveyor Knight Frank Newmark Global executive director Sarkunan Subramaniam, meanwhile, feared that the removal of the RPGT would induce property speculating to reappear.

"The tax was introduced in 1967 to curb property speculating. When it is removed, unscrupulous parties will take advantage of the vacuum resulting in the return of property speculating," he said.