Malaysian property sales seen declining after GST

PETALING JAYA: Property transactions are expected to decline by about 10%, with house prices remaining flattish or rising slightly by 3% to 5% upon the implementation of the goods and services tax (GST) on building materials, research house JF Apex Research said.

The imposition of the 6% GST will start on April 1 this year.

It anticipates the property market to moderate across the board, especially in the Klang Valley, Penang and Johor for all types of residential property, due to the challenging economic outlook, stringent mortgage approval, the Government’s cooling measures and the wait-and-see approach by buyers upon the implementation of the GST.

Developers that focus on the mass-market residential property segment, priced between RM300,000 and RM800,000, as well as with minimal exposure in Iskandar Malaysia, are expected to be more sustainable in their growth this year, added JF Apex Research.

“This segment is well-supported by genuine buyers who look for owner-occupied property,” it noted in a report yesterday.

The research house expects fewer new launches from developers moving forward amid weak consumer sentiment, and that more products in the market would be focusing on medium-cost housing, with smaller built-up areas but high average selling prices, aiming for genuine buyers.

Meanwhile, CIMB Research said property sales in the first quarter of the year would maintain the momentum from the second half of 2014 on the back of renewed confidence and expectations that property prices would rise post-GST implementation.

However, it noted that buyers would likely adopt a wait-and-see attitude for six to nine months after the implementation of the GST, which is in line with typical consumer behaviour in most countries.

“The net effect is that 2015 could end up being a similar year to 2014 in terms of property transactions, which we would categorise as a lacklustre year,” CIMB said in a report.

The research house has downgraded the sector to “neutral” from “overweight”. It has also downgraded UEM Sunrise Bhd to a “hold” from a “buy” and SP Setia Bhd to “reduce” from “hold”. 

“UEM Sunrise was the worst performer, as Iskandar Malaysia has been hit hard by the cooling measures as well as concerns of oversupply from China-based developers,” it said, adding that the successful launch of UEM’s maiden project in Australia had helped cushion the blow.

“In view of very difficult property market conditions in Iskandar Malaysia, UEM Sunrise will likely continue to rely on new launches in the Klang Valley and Australia to drive sales in 2015,” it noted. - The Star