Home Prices Down 0.7% in Q4 2016

Pavither June 28, 2017

Overall residential prices across Malaysia dipped by 0.7 percent in Q4 2016 on a quarterly basis, according to the latest data from the Valuation and Property Services Department.

This marks the first quarter-on-quarter drop in the country’s House Price Index (HPI) since the 1.83 percent fall recorded during the last quarter of 2008.

Most states posted declines ranging from 0.1 percent to 3.2 percent. Perlis and Kedah both saw the smallest price drop of 0.1 percent, followed by Selangor (-0.2 percent), Kelantan (-0.5 percent), Perak (-0.9 percent), Pahang (-1.2 percent), Kuala Lumpur (-1.4 percent), Sabah (-1.4 percent), Sarawak (-1.9 percent), and Penang (-3.2 percent).

On other hand, home prices in Melaka were flat. That Johor and Negeri Sembilan both rose by 0.9 percent, while residential values in Terengganu increased by 1.8 percent.

In a report by The Edge, Henry Butcher (Malaysia) Sdn Bhd COO Tang Chee Meng said the decline in the HPI was unsurprising given the currently sluggish property market.

“When the HPI records a decline, it means prices have registered a drop, so one can conclude that on the whole, prices have declined in 4Q2016 from the previous quarter, which is clearly a manifestation of the soft market condition.”

He explained that the marginal drop in the index could also be due to the lower net costs of some new residential launches. While the actual prices of these homes may not have fallen, developers could have offered rebates and interest-free easy payment schemes.

Moving forward, Tang is uncertain if the dip in Q4 2016 is just statistical blip or the beginning of a downtrend in the upcoming few quarters. “My personal view is that the HPI will recover in Q1 2017, but will remain fairly flat through the year.”

On the other hand, Metro Homes Director See Kok Loong forecasted that home prices in the country will continue to fall in light of weak market conditions, in which some home sellers are reducing their asking prices.

“The increase in stamp duty for real estate transactions priced above RM1 million from 3 three percent to four percent starting January 2018 and the impact of the goods and services tax (GST) as well as the China government’s curbs on capital outflows are expected to have an impact on the market,” he added.

Image sourced from Wikipedia


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