Fewer property deals in Malaysia last year but value higher
19/04/2007 Business Times By Azlan Abu Bakar

MALAYSIA'S property market transactions volume dropped 2.5 per cent in 2006 to 269,600, Deputy Finance Minister I Datuk Dr Ng Yen Yen said yesterday.

However, the total value of property transactions for the year improved 4.9 per cent to RM58.58 billion from RM56.78 billion in 2005.

Dr Ng said all sub-sectors saw fewer transactions in 2006 except for the commercial sub-sector, which witnessed a marginal increase of 0.2 per cent in transactions compared to 2005.

The residential sector had the biggest drop of 3 per cent, but remained the prime mover of the property market with a 65.4 per cent share.

She said the overhang in the residential property market amounted to 25,645 units worth RM4.18 billion last year, of which 89.4 per cent or 22,936 had been in the market for more than 24 months.

Most of these were located in Johor (8,215 units) and Selangor (5,233 units), she said at the launch of the National Property Information Centre (NAPIC)'s 2006 Property Market Report in Kuala Lumpur.

Terraced houses and condominium units formed the bulk of unsold residential properties, comprising 39.6 per cent (10,168 units) and 28.8 per cent (7,229 units) of the total respectively.

In terms of prices, 61.2 percent of these properties were below RM150,000 per unit.

A total of 38,526 new housing units were offered last year, with a 40.6 per cent take-up rate.

The increasing number of overhang properties should be seen as a warning of a saturated market, Dr Ng said, adding that housing developers should be more innovative and produce quality houses to remain competitive and meet market needs.

She said better prospects are expected for the property market in 2007, following various measures and incentives introduced to attract investments in the sector.

These include the RM5 billion Private Finance Initiatives Facilitation Fund, liberalising foreign ownership for properties of more than RM250,000, removing the Real Property Gains Tax, and improving the delivery system of local authorities.

Meanwhile, when asked whether the new prices for steel and billets would effect the pricing of houses, Dr Ng said the increase would be gradual.

"We don't foresee the prices of houses to double or triple but there will be a steady increase," she said, noting that houses will still be affordable.