Johor and Penang’s property markets languished in 2015 due to the weak ringgit, the recently implemented goods & services tax (GST), and economic uncertainty within and outside Malaysia.
Looking ahead, Landserve (Johor) Executive Director Wee Soon Chit believes that uncertainty in the state’s property market will linger in 2016 due to sluggish economic conditions.
“Johor’s property market is rather weak. This coincides with the traditional holiday/festive season from end-November to February. Less people are likely to commit themselves during this period, but we foresee stronger interest for properties in the second quarter of next year.”
On a positive note, the weakened ringgit has made homes more affordable for Singaporeans and other expatriates. The situation has also helped Malaysians working in Singapore.
“This group contributed to a significant demand for properties and we expect them to continue to form the bulk of property purchases,” Wee noted.
However, foreigners like Singaporeans will be cautious when investing in Johor properties.
“The slowdown in the property market, the concern about the general economy and oversupply situation, however, makes them more cautious about property investment here,” he said.
Potential buyers are also worried about the supply glut of homes in Johor as large developers from China, like Greenland, Country Gardens and R&F Properties are building many properties.
As a result, Johor’s real estate sector has tilted in favour of buyers. In fact, some developers are offering up to 20 percent in discounts just to woo customers, especially for luxury homes.
Meanwhile, market activity in Penang’s property market has plunged by nearly half since it peaked in 2011, said Michael Geh, a senior partner at Raine & Horne Malaysia.
“The market recorded total transactions of 9,667 in the last quarter of 2011 which is the highest number of transactions in the past four years before it saw a drastic drop of about 48.47 percent in the first quarter of 2012 to only 4,981 transactions.”
At the same time, the value of transactions fell sharply from RM2.27 billion to RM1.5 billion in Q1 2012.
“The market continued to contract in 2013 where transactions dropped slightly by 786 transactions to 4,193 transactions (with a total value of RM1.55 billion) in the first quarter and it remained stable with slight increases throughout the year, bringing the total transactions to 17,700 units with a total value of RM7.1 billion for the year.”
In 2015, the number of deals decreased by around 26.17 percent to 3,834 transactions with a collective value of RM1.55 billion compared to the levels seen in Q4 2015. “If compared to the same quarter of last year, the market also saw a contraction of about 10.65 percent or by 457 transactions.”
Moving forward, prospects for Penang property hinge on how the market will respond to the unveiled Public Transportation plan. According to experts, residential prices in areas located near upcoming LRT stations are expected to remain unchanged or rise significantly.
Mangalesri Chandrasekaran, Editor at PropertyGuru Malaysia, edited this story. To contact her about this or other stories email mangales@propertyguru.com.my
