Penang property slowdown

GEORGE TOWN: The property market in Penang will slow down next year, as there will be reduced transactions and fewer new launches.

Real Estate Housing Developers’ Association (Penang) chairman Datuk Jerry Chan said that the real property gains tax (RPGT) and tighter loan conditions imposed by banks were the reasons for the property market slowdown.

“However, this will not affect property prices, which will remain stable,” Chan said.

The price of land has increased substantially in prime locations over the past five years, as have the prices of raw materials such as sand and steel, according to Chan.

“There is also no property bubble, as there had been no large supply of properties coming into the north over the past five years.

“There hasn’t been any irresponsible lendings either,” he said.

Chan was speaking at Rehda’s annual press conference on the property market outlook for 2014.

According to Chan, the state government also played a role in jacking up land prices.

“For example, when the state government compensates Beijing Urban Construction Group (BUCG) for the cost of building the proposed RM6.3bil undersea tunnel project in Tanjung Tokong with a 110-acre land, the state government has indirectly influenced the price of land in the area.

“The value of the 110-acre site is about RM1,200 per sq ft, when divided by the value of the project.

“This automatically sets a new benchmark for the price of land in Tanjung Tokong, Tanjung Bungah and other prime locations on the island,” he said.

Current land prices in Tanjung Tokong, Tanjung Bungah and prime locations in the northeast district hover between RM500 and RM1,000 per sq ft.

In the southwest district, land prices are priced from RM120 per sq ft onwards.

Chan also said there were no provisions to help out first-time buyers in Budget 2014.

“We would like to see some kind of help for first-time buyers.

“Currently, first-time buyers of affordable housing units will have to pay the full base lending rate of over 6%, as they are in the high risk group, compared with about 4% enjoyed by those in the low-risk category,” he added.