Penang has reduced its minimum price threshold for foreign property ownership by up to 40% to clear RM2.6bil worth of overhang units in the state.

Penang local government, housing, town and country planning committee chairman Jagdeep Singh Deo said the revised pricing was valid for one year starting yesterday.

“For stratified properties, ceiling prices will be reduced from RM1mil to RM800,000 on the island and from RM500,000 to RM400,000 on the mainland through a 20% reduction.

“Ceiling prices for landed properties on the island will be reduced from RM3mil to RM1.8mil, a reduction of 40% and from RM1mil to RM750,000 on the mainland, a reduction of 25%.

“The decision to reduce the ceiling price of unsold properties in Penang was to clear the remaining 3,043 overhang units worth RM2.6bil and to assist the property market affected by the Covid-19 pandemic,” he said at Komtar yesterday.

An overhang unit is defined as a residential unit that is unsold for more than nine months after receiving the Certificate of Completion and Compliance (CCC).

Source: TheStar.com.my

Penang government has announced a 10 percent discount for all types of affordable housing in the state for a period of one year starting from today.

State Local Government, Housing, Town and Country Planning Committee chairman Jagdeep Singh Deo said the discount package is part of the Housing Ownership Campaign Package (Penang edition) 2020.

“Under this package, the new ceiling price for affordable homes on the island are from RM135,000 to RM270,000. Previously, it ranges from RM150,000 to RM300,000.

“In Seberang Perai, the new ceiling price is from RM135,000 to RM225,000. Previously, it was from RM150,000 to RM250,000,” he told a press conference in Komtar today.

Jagdeep also emphasised that the size of the affordable housing would remain at 850sq ft per unit.

“However, if the property developers decided not to follow the new price ceiling as instructed by the state government for affordable homes and choose to remain with the old price ceiling, they are allowed to do so but under one strict condition that they must provide a bigger size of the unit to at least 900sq ft,” he said.

For the low medium-cost (LMC) housing category, Jagdeep said the state government would maintain the housing price at RM42,000 for low-cost housing and RM72,500 for low medium-cost housing.

“This is done despite other states having raised the housing price for LMC from RM60,000 to RM100,000.

“As a matter of fact, Penang has the lowest housing price for the LMC category in the country.

“All this shows that the Penang government cares for its people and wants to assist the home buyers especially those who intend to buy affordable and LMC homes,” he added.

According to Jagdeep, until June this year, there are 105,719 units of affordable homes that have been built, being built and approved to be built.

“We will work even harder to achieve our goal of building 180,000 units of affordable homes by 2030,” Jagdeep said.

He said the state government also would set a special condition for the property developers to install more public amenities in each affordable housing.

“They include recreational space, multipurpose hall, public library, gymnasium, swimming pool, children’s playground and others.

“We will also set up a condition that the rating score of QLASSIC under the Construction Industry Development Board (CIDB) must be not less than 70%.

“This is to ensure the highest quality of the construction of affordable housing although the ceiling price has been reduced,” he added.

Jagdeep also announced the state government’s decision to reduce the ceiling prices of between 20% and 40% for foreign buyers for overhang properties in Penang for a one year period.

“For stratified properties on the island and the mainland, the new ceiling prices are RM800,000 and RM400,000 respectively. The previous ceiling price was RM1 million (island) and RM500,000 (mainland).

“For landed properties on the island and the mainland, the new ceiling prices are RM1.8 million and RM750,000 respectively. The previous ceiling price was RM3 million (island) and RM1 million (mainland).

“The decision to reduce the ceiling price of unsold properties in Penang is to clear the remaining overhang units and to assist the property market that is affected by the Covid-19 pandemic.

“As of today, Penang has 3,043 unsold properties, amounting to RM2.6 billion. An overhang unit is defined as a residential unit that is unsold for more than nine months after it has received the Certificate of Completion and Compliance (CCC),” he said.

Jagdeep said although with overhang units, Penang still managed to control the amount of unsold properties from year to year compared to other states that recorded an increase every year.

Source: Buletin Mutiara

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Incentives introduced under the fourth Covid-19 stimulus package, dubbed Penjana, will help boost investor sentiment towards the property sector.

Nevertheless, analysts in general remain largely neutral on the sector, citing subdued prospects due to the challenging economic outlook.

For instance, CGS-CIMB Research said it expected the property sector to trade higher in the short term due to the “feel-good factor” from the positive measures announced.

“However, we stay sector neutral given the weak macro outlook, affordability issues and expected lower property sales, even though the KL Property Index is currently trading at 0.4 times price-to-book-value (P/BV), which is around two standard deviation below its historical 10-year valuation of 0.75 times P/BV, ” the brokerage said in a note.

TA Research pointed out that the measures introduced under the recently unveiled short-term economic recovery plan were “wishes come true” for the property sector.

“Developers’ wishes have finally come true with the government announcing the Home Ownership Campaign (HOC) 2020, along with real property gains tax (RPGT) exemption and removal of 70% loan-to-value (LTV) ratio on third housing loan, ” the brokerage wrote in its report.

“Home buyers and investors are expected to be the biggest beneficiary from Penjana, as measures unveiled would help to reduce their entry and exit cost.

“We believe all private developers will also benefit from Penjana, as the measures should help absorb developers’ unsold stocks and boost sales of new property launches, ” it said.

TA Research noted that while the current accommodative interest-rate environment would continue to bode well for the housing market, it reckoned the loosening policy alone would unlikely revive the overall housing market.

This is because weak consumer sentiment and stringent lending practices remained key reasons for the lacklustre property sales.

It maintained its “neutral” stance on the property sector.

“Although we believe property buying interest will increase with Penjana incentives, the property sector outlook remained clouded by key challenges such as uncertainty of Covid-19 containment, the gloomy economic outlook, cautious spending due to job loss anxiety, unresolved overhang issues and strict lending policy, ” TA Research said.

“Depending on the effectiveness of the government’s efforts on restoring businesses and employment, increasing people’s purchasing power as well as discovering new economic opportunities, we expect a gradual recovery in the second half of 2021, ” it added.

Last Friday, the government unveiled several positive measures for the property sector under Penjana.

The HOC, which would run from June 1,2020, to May 31,2021, would see the implementation of a minimum 10% discount on residential properties, stamp duty waiver of up to RM1mil on instruments of transfer for properties priced between RM300,000 and RM2.5mil, and stamp duty waiver of up to RM2.5mil on loan agreements for properties priced between RM300,000 and RM2.5mil.

The RPGT exemption for individuals would be effective June 1,2020 to Dec 31,2021. This would be limited to disposal of three units of residential homes per person. The removal of 70% LVT ratio on third housing loan was for property priced RM600,000 and above.

“We believe these measures are positive for developers but the impact could be largely mitigated by an anticipated contraction in Malaysia’s gross domestic product and potentially higher unemployment rate due to disruption from the Covid-19 outbreak, ” CGS-CIMB said.

“It remains uncertain whether people will purchase big-ticket items during challenging times despite incentives given and low interest rates (2%), as property prices have more than doubled from 2009, ” it added.

Meanwhile, Public Investment Bank Research (Public Invest) said it remained “neutral” on the measures announced for the property sector under Penjana.

“We believe that in the short term, stresses due to the slowing economy could take centre stage with recovery longer than expected owing to the potential hike in unemployment that could deter big-ticket buying such as properties, ” it said.

“While the tax reliefs are positive, consumer sentiment is still scarred by the Covid-19 pandemic and impact from the movement control order, ” it noted.

In addition, Public Invest said the ongoing political uncertainties and high property overhang could also dampen property demand albeit the undemanding valuations. Hence, it maintained its “neutral” call on the sector.

Source: TheStar.com.my

The number and value of residential property transactions in Penang are projected to decline between 50% and 60% in the second quarter of 2020 from the preceding first quarter.

“We project a 50%-60% drop from the first quarter because the property market went into a silent mode after the movement control order was implemented in March.

“Most of the transactions happened in January and February, ” Raine & Horne Malaysia director Michael Geh (pic) said.

According to Napic statistics, in the first quarter the number and value of transactions for Penang stood at 2,748 and RM1.06bil.

On the island, depending on location, the current price of high-rise residential properties is 5% to 10% lower than in 2019.

“After the moratorium on the repayment of housing interest, we expect a further drop of 5% to 10%.

“We are not seeing a rush to sell properties because of the freeze on the repayment of housing interest, ” he said.

According to Geh, the cash incentives offered to promote the sales of housing projects in the primary market for the last 12 months had impacted the secondary market.

“The sales in the secondary market have contracted by about 30% as a result, ” he said.

On oversupply, Geh said: “The overhang of residential properties in Penang in 2019 was 3,353 units, compared to 3,445 in 2018.

“Some 35% of the overhang residential properties are priced between RM500,000 and RM1mil.

“About 25% are those priced between RM300,000 to RM500,000, while another 22% are priced above RM1mil, ” Geh added.

However, there is a surge of interest for the rental market.

“We can see more interest to rent than to purchase for the past 12 months, which may have to do with the difficulty of obtaining a housing loan.

“So far, the interest in rental has yet to trigger an increase in rentals.

“For shopping lots in a mall, the rentals have been lowered by 20% to 30% to retain existing tenants whose business have been affected by the virus outbreak, ” he added.

Geh said he could not see beyond the second quarter.

“When will the country open up its borders again? Until it opens up, the interests shown by overseas buyers for the residential properties would not translate into sales.

“We have seen healthy interests from overseas buyers because of the weakened ringgit, which has made the local properties even more attractive.

“The demand from the local market might be dampened due to the increase in unemployment in the near future.

“Many companies have just started to resume operations and will be reassessing their human resources needs soon.

“This means they could embark on retrenchment exercises to clear excess head-counts because of the business environment.

“Because many parts of the globe are still in lockdown, we can see companies in the manufacturing sector not taking in new employees. Therefore, we can expect the demand for affordable housing in Penang to be weak, ” he said.

On the federal government’s decision to waive the real property gain tax (RPGT) from June 1,2020 to Dec 31,2021 and restart the national home-ownership campaign, Geh said these measure were welcome and should have a positive impact on the property market. “The RPGT waiver will jump-start the property market, ” he said.

Source: TheStar.com.my