Sim foresees that this overhang is only temporary in Kuching and can be absorbed when the banks are willing to lend based on more relaxed guidelines, job security returns and world economic and market confidence are restored after the MCO lockdown.
KUCHING: Houses will still remain in demand albeit at a lesser level following the Covid-19 dampener, Sarawak Housing and Real Estate Developers’ Association (Sheda) Kuching Branch opines in regards to unsold properties in the market.
According to Sheda Kuching Branch chairman Sim Kiang Chiok, housing is one of basic needs and there will always be a demand for houses even though it might be less in this transition economy restoration period.
“My personal opinion and based on National Property Information Centre (Napic) reports, the overhang residential properties are 1,966 units, 238 units of shop and 60 units of service apartment at end of first quarter of 2020 (1Q20) or up to the lockdown or Movement Control Order (MCO) in Malaysia,” Sim said.
“Before the MCO, the overhang of residential properties can be due poor location, pricing mismatch, suitability of building designs, development layout and ease of raising financing.
“Now with the unprecedented lockdown here and all over the world, I foresee that property market will be weak until the economic resumption and confidence in the business market are restored.”
Sim noted that in any property development, the tripartite relation of the developer, purchaser and the financier (banks) must be restored, and only then will the property market be active and vibrant.
“Now that we are going through the lockdown exit plan, time is needed to restore market confidence and business activities.
“In this transition period there will be demand for property by Top 20 per cent (T20) earners , upper Middle 40 per cent (M40) and those with good employment such as the civil servants where their income is secure and constant, and whereby these categories of income earners can still secure financing from banks to buy properties.”
Sim recapped that as part of the short term economy stimulus package, the federal government announced on June 5 that the Housing Ownership Campaign (HOC) has been reintroduced from June 1, 2020 until May 31, 2021 to generate interest in the property market and to assist the residential property market by giving stamp duties exemption and developers giving at least 10 per cent discount on the approved selling price.
“The Real Property Gains Tax (RGPT) exemption up to three residential properties and third housing loan are exempt from the lower financing margin are much welcome for those who are in need of purchasing a house.
“My wish is that these incentives could be extended to all type of properties rather than limiting it to residential property only so that the effect of property market can be more substantial.”
On whether the city is facing a property bubble, Sim referred to the overhang figures compared to the total demand of houses, noting that the total number of residential houses transacted in 2019 is about 9,914 units of houses and the overhang is 1,966 units up to 1Q20 which are about 20 per cent of the transacted number of houses.
“In the breakdown the strata titled properties such as townhouse, condominium and apartment constituted about 1082 units, and landed 884 units.
“In Kuching, overhang properties are 994 units made up of 755 strata titled and 239 units of landed properties.”
With Kuching’s population growth, Sim foresees that this overhang is only temporary and can be absorbed when the banks are willing to lend based on more relaxed guidelines, job security returns and world economic and market confidence are restored after the MCO lockdown.
“We are facing and unprecedented world Covid 19 pandemic and which have created the worst economic crisis the world have ever encountered.
“With our perseverance, hard work, good leadership and policy by the government, we can overcome this challenge of epic proportion and we must also remember we are still in the pandemics as no cure or vaccine are found yet.
“We all must stay alert, stay vigilant and stay calm to persevere through this pandemic.”