KUCHING: Sarawak's property market has slowed down in the first few months of 2014, says CH William Talhar Wong and Yeo Sdn Bhd (WTWY), as local developers experience knee-jerk reaction in sales while many have delayed their launches and reduced sales targets.
In its report entitled '˜Property Market Review for the first half of 2014', the good run between 2009 to 2013 seems to be consolidating in early 2014, WTWY said, possibly unveiling 'the tip of the iceberg' of the impact of tightening measures put forward in the recent Budget 2014.
These moves include the increase in real property gain tax, the abolition of Developers Interest Bearing Schemes as well as strict lending policy implemented by banks and financial institutions, which is aimed at curbing speculation and the impending implementation of the Goods and Services Tax (GST).
'The last few years have seen property prices increase anywhere between 30 and 100 per cent. Purchasing power was further weakened with the recent increase in Base Lending Rate (BLR) to 3.25 per cent,' WTWY said in the report.
'Increase in property prices in the primary market due to increase in 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.'
The property market for 2014's first half is showing tell-tale signs of a correction, WTWY opined, with decreased number of units launched and developed compared to the same period a year ago as well as slower sales due to most property products having been already absorbed in the past two years or so.
Performance for the property market for Sarawak can be said to be moderate and consolidating with transactions recorded by NAPiC declining by 22 per cent in volume and 13.3 per cent in value.
'This is true for almost all sub-sectors, notably agriculture by 23 per cent and commercial by 28.8 per cent, although values increase by 5.8 per cent and 12.6 per cent for development lands and industrial units respectively,' explained WTWY.
'Of particular interest would be the residential sector which decreased by 22.8 per cent and 20.7 per cent respectively in terms of both total transaction value and volume.
Agriculture lands make up the highest proportion of transactions at 2.4 per cent followed by residential (40.3 per cent) and commercial (seven per cent).
'However, it is prudent to note that generally, property prices have not dropped. On the contrary, property prices continue to rise despite the slower sales performance. Selling prices are expected to further increase with the implementation of the GST in 2015.'
Moving ahead, mega infrastructure projects seem to be the wildcard to boost the sector as better connectivity will ease travelling time and open up and boost sales of new areas, WTWY said.
'The building, upgrading and improvements of roads and infrastructures have served to open up new areas in the state such as experienced by Kuching via the new Matang Jaya-Demak link road, Batu Kawa-Matang road and Stutong-Airport Link Road.
'The houses in these new areas are priced quite competitively and have seen prices comparable to those in 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.'
WTWY also underscored strata titled residential developments -such as condominiums, apartments and some townhouse offerings '“ were catching on in the 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 per square feet (psf) a year or to as high as RM600 psf in the prime areas,' it observed.
'Forced by the increase in land costs, and smaller-sized development lands, developers find it more lucrative to build high.
'This development type offers a more affordable alternative compared to new landed houses and is also spurred on by the receptiveness of the new generation of buyers who prefer and appreciate convenience and security.'
Moving ahead, WTWY said the lacklustre 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 further increase in the BLR.
'However, some are of the opinion that the impending GST will spur earlier sales later part of this year in a move to avoid the tax.'
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