Malaysia witnessed the first sign of recovery in property demand in May 2016, when it rose (as measured by Bank Negara Malaysia’s “Applied Loan for Purchase of Property”) for the first time in 16 months, by two percent year-on-year and five percent month-on-month to RM25.79 billion, reported The Sun Daily.
MIDF Research described the increase as a small positive surprise as it could signal recovery in loan demand should the trend persist.
The “Approved Loan for Purchase of Property”, however, was still lower by 13 percent year-on-year to RM9.91 billion, indicating that Malaysia’s tighter lending environment has offset the small recovery in demand.
“We will continue to monitor the increase in demand to see whether it is a sustained change in trend,” said MIDF Research.
It also noted that property transaction value fell in Q1 2016. However, the property transaction value for affordable properties dropped at a less severe rate.
National Property Information Centre’s (NAPIC) latest preliminary Property Market Report showed that property market transaction value fell 18 percent year-on-year to RM32.0 billion during the first quarter of 2016.
The negative growth is consistent with the 14 percent decline in volume to 80,029 units in Q1 2016.
“Further analysis of the data suggests market preference towards affordable houses of below RM500,000. As it is, transaction value for properties below RM500,000 declined 11 percent year-on-year compared with a 23 percent decline for properties worth RM500,000-RM1.0 million and a 20 percent decline for properties worth RM1.0 million and above,” said the research house.
Out of the eight developers under its coverage, 25 percent or two (Eastern & Oriental Bhd and UEM Sunrise Bhd) posted earnings which were below expectations. Only Glomac Bhd beat its estimates primarily due to higher-than-expected billings.
“Overall, Q1 2016 earnings were mixed with two underperforming expectations and one exceeding expectations,” said MIDF Research.
Notably, Consumer Sentiment Index (CSI) recovered to 72.9 in Q1 2016 from its all-time low of 63.8 in Q4 2016, based on Malaysian Institute of Economic Research’s (MIER) latest publication.
MIER, however, noted that the CSI remains way below the threshold level of confidence while job outlook clouds the consumers’ expected income.
“We believe that the data suggest some return of interest among property buyers but buyers are likely to remain price sensitive,” it said.
With this, MIDF Research maintained a neutral call on the property sector with UOA Development Bhd as its top pick.
Images credit: Tend to Travel
Diane Foo Eu Lynn, Senior Content Specialist at PropertyGuru, edited this story. To contact her about this or other stories email diane@propertyguru.com.my
