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Property prices likely to increase before year-end

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The selling prices of residential properties in the country will likely increase by 5% to 20% soon.

Real Estate and Housing Developers’ Association immediate past chairman Tan Hun Beng told StarBiz that a price hike was in the offing and likely to happen before the end of the year, as construction costs had increased substantially.

The price of concrete has jumped 32% to RM258 per cubic metre, while steel bar prices have increased 46% to RM4,100 per tonne.

In addition, the prices of metal roofing and c-purlin have increased by 60% and 95%, respectively.

Tan said developers have yet to pass the higher cost of building materials to customers.

“The steep hike in building material costs will impact the selling price of the incoming supply of properties by at least 5% to 20%, depending on their size and location.

“The hike in selling prices is inevitable as developers are already paying substantially more for their raw materials,” he said.

According to Tan, there will also be fewer property launches in 2022 due to high construction costs.

According to the latest National Property Information Centre (Napic) report, some 54,836 houses will enter the Penang property market over the next three to four years.

The Napic report shows that about 79% of the new houses are affordable and high-end, priced from RM300,000 onwards.

Tan said this was a primary concern as Napic has indicated that the unsold houses in Penang from the completed, under construction and not yet constructed categories totalled 11,540 units.

In late November, the state government declared that Penang has the second-highest number of unsold properties in Malaysia, with 4,683 completed housing units worth RM3.66bil.

Tan said assuming that developers had sold some 30% of the 54,836 houses, there would still be a leftover of 38,385 units.

“In 2020 and 2021, the residential property transactions in Penang were 11,736 and 13,648, respectively.

“Assuming that the annual consumption stays between 11,000 and 13,000 units per annum, it will take between three and 3.5 years to absorb the excess supply, which doesn’t even include the 11,540 unsold units,” Tan said.

He added that if the economy remained challenging with high-interest rates, the time required to clear the oversupply would be much longer.

“This is, of course, assuming that no new projects will be approved.

“If there are more houses on the way, the inventory will grow, making it more difficult to clear the glut,” Tan said.

Tan added, however, that the incoming supply would mitigate the impact of fewer property launches over the next couple of years, ensuring that the market would have sufficient stock and variety for consumption.

Source: TheStar.com.my

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  1. JustinLeong99
    June 21st, 2022 at 16:25 | #1

    Those leftover units is either lame location or the top of the building which has the risk of water leakage. Moreover, they are leftover but at the price of premium since it is built. Then? Penang no need to build new project until those leftover is sold at premium price? No need approve any other project? Then the citizen live on the road? Stupid, who would want to buy leftover unit (beside pump room, top of the floor, bad specs house) at premium price?

  2. JustinLeong99
    June 21st, 2022 at 16:27 | #2

    The only reason there’s so many unsold units is because they are leftover units at the premium price. Would you buy a top unit with risk of water leakage at the price of premium? Meanwhile the other residence bought seaview, town view, pool view, middle high floor with discounted price?

  3. Huhu
    June 21st, 2022 at 20:14 | #3

    @JustinLeong99
    Wrong. If really a good residential project with premium price & location no problem to get buyers. Even 1M+ also got buyers. Infact before CCC already 95% sold out. Those left over units are in location far away from town specially Teluk Kumbar Bayan lepas & Batu Ferrignhi as even CCC still only 70% sold. And not to mention project in straits quay, that’s 2 luxury service apartment still got about 200 units unsold even now occupied.
    Many unsold unit also in Batu kawan numerous of project.

  4. JustinLeong
    June 21st, 2022 at 22:33 | #4

    Then this is even more ridiculous. Those luxurious projects hinder the upcoming affordable project’s launch for the citizen? Just because the supply of luxurious project is exceeding the demand of luxury buyer, Malaysia need to stop approving new projects? So those who can’t afford luxury project, need to take the fall? The enormous inventory is due to oversupply of luxury projects. So, just stop approving those luxurious one then.

  5. ThePotato
    June 21st, 2022 at 23:26 | #5

    JustinLeong :
    Then this is even more ridiculous. Those luxurious projects hinder the upcoming affordable project’s launch for the citizen? Just because the supply of luxurious project is exceeding the demand of luxury buyer, Malaysia need to stop approving new projects? So those who can’t afford luxury project, need to take the fall? The enormous inventory is due to oversupply of luxury projects. So, just stop approving those luxurious one then.

    Once u see affordable property quality, you will never go affordable.

  6. SKLin
    June 22nd, 2022 at 00:10 | #6

    Yes, it is quite impossible to clear the glut as the oversupply is simply too huge. Having said that, price will still go up due to increase of building cost. As a result, rents will remain low (as there are plenty of empty homes to let), making investment buys totally senseless.

  7. Alan
    June 22nd, 2022 at 08:26 | #7

    @ThePotato
    Once you see those B40s and M40s, you will know affordable is their only way out. It’s not about the quality, is the fact of having a shelter. RM300k to buy subsale apartment. Might as well buy 300k new CONDOminium unit. Meanwhile the country leaders is oversupplying the luxurious units. Not helping those B40s and M40s category at all.

  8. ryu
    June 23rd, 2022 at 12:41 | #8

    @Alan, many M40s can afford to buy condo in Penang lah, my friends (earning around 5k to 10k at age of 30) also bought normal condo for themselves. Due to the MCO, many developers stop launching new products (except Ideal) and the purchasers got “no choice” but had to buy those oversupplied units before MCO. I can tell you the market is good and soon more projects will be launching due to high demand from youngsters, who desperate to buy a house from themselves.

    If you got money buy LV, if not go for cheap bag.

  9. Alan
    June 24th, 2022 at 10:35 | #9

    Then RIP to B40s.. hahaha.. let’s encourage government to approve more luxurious project and reject all the low price condos.

  10. Thinesh
    June 24th, 2022 at 11:05 | #10

    @ryu
    What do you mean normal condo? What is the range? During MCO many good deal actually.

  11. ryu
    June 24th, 2022 at 14:44 | #11

    @Thinesh, I means normal condo priced around 500k to 700k (above the ceiling price set for affordable house in Penang Island). Many of my friends bought new house during MCO, lower price and free MOT. Don’t expect to pay low price and get good quality house, this will never exist in our life.

    We are living in one of the best islands in the world, if we continue to build low cost flats in island, how to attract foreigners to invest? We need more luxury condos in Island.

  12. Thinesh
    June 24th, 2022 at 18:40 | #12

    @ryu
    I see. By building RM500k to 700k can attract morr foreigner & improve status of island? Does it make sense? RM500k to 700k are you refer to Amarene or Setia skyville or Zen6?

  13. Alan
    June 25th, 2022 at 17:29 | #13

    Basically it means Government is trying drive away the poor B40s away from Penang Island. So only those rich within the country or outside the country can live in Penang Island. Then, Malaysia will have Penang Island to earn tourism money to contribute to the country. If possible, delete all the poor people in the Island as soon as possible. Swoosh

  14. Jason Kee
    June 25th, 2022 at 20:01 | #14

    @Alan
    Can not delete. We have many affordable house in Penang yet.
    Macallum/Jelutong/Air itam/Padang tembak/Farlim/Paya terubung/Teluk Kumbar/Sungai pinang/Sungai ara many more.
    How to delete? After 20/30 years or 50 years you already RIP but affordable house still in Penang. Don’t worry.

  15. LEE
    June 26th, 2022 at 16:57 | #15

    besides normal supply and demand, material and labor costs, inflation , unemployment, unsold units, interest rates, government intervention all contributable factors

  16. Alan
    June 27th, 2022 at 13:15 | #16

    Still doesn’t change the fact, the need to build more affordable housing. Rather than letting the old affordable housing project to hike in prices. If you can’t build enough affordable housing for the peoples, is luxurious project a necessity? Material,labor cost, inflation, unemployment, unsold units, interest rates all these thing only affect affordable housing? Those luxurious project miraculously will not have any problem? Although they are the reason there’s so many unsold units? Due to overwhelming seller per buyer? Doesn’t make sense. Pure illogical.

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