Penang Property market slowed down – Updated

From Penang, I got to know that one developer who launched its condo project without free car park is now giving one (1) car park. However, my expectation for ANY new condo project is two (2) car parks. Thus far, this has been true for all new launches from established developers as well as newer ones. However, there are still minority of developers which are still giving just one(1) car park. I think with the market going down, the developer has no choice but to offer something extra. In fact another developer called up their buyers and said a rebate of 5% is now available to reward its loyal customers. Actually, I think this is because they wanted to relaunch their project at a lower price since it has been selling for many months and so many units are still left. Another developer decided to just slow down all their marketing activities because it does not want to appear too ‘desperate’. No doubt, there are still many successful launches, right location, right price and effective marketing but the slowdown has started to affect some of the inflated confidence of many of these developers who once thought the market would just buy whatever they offer.
Everyone I know has been saying that the property market is slowing down. Well, everyone except one agent who told me that his business is still very good. In actual fact, market is slowing down. This is the effect from the many cooling measures implemented and will be implemented in the near future. Buyers are now also more cautious and thus may want to wait and see before they commit to a huge mortgage. What about the developer’s side? For those whose projects are yet to be launched, we can see they are now being delayed. I think this is a good move, rather than having bad sales if the location is not the best or the pricing seems to be too high compared to the perceived value. How slow is slow? Let’s refer below:
Penang’s total transaction has gone down close to 30% year on year. KL’s transactions has done down close to 50%. Selangor’s total transaction went down slightly over 21%. The only one still showing huge growth is Iskandar. However, even Iskandar has slowed down though many developers are now snapping up parcels of land with full anticipation of a bullish time in the near future. Just look at all those huge names from China and you would understand what I meant.
The question is, how long would this period last? Well, in terms of demand, it is still there but the developers has to relaunch or think again. the magic word is ‘affordability’ instead of huge profitability. No one wanted the developers to stop launching but the time to simply launch anything has passed. Many prominent developers are launching medium priced projects instead. I think this is the correct way to go. I reiterate, if you are buying for own stay, this is the best time to negotiate for a good price for the unit you have been eyeing. You may wait for market to soften further but secondary market has not increased as much as primary since the beginning. I seriously wonder how low would it go. Of course if it really does go lower, then I may buy Penang instead of KL.
Updated on 20 April 2014
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  1. Hi
    It is going to be correction in price as well as the market, ultimately, it is going to benefit to everyone as the price had gone up to high especially new launching project, it certainly will not benefit or healthy in this type of phenomenal, the market seems to be speculative manner and may resulted in property bubble, it ends up the staggering property would only benefit certain group of people, there are many consequences if the situation keep going on in this way, the younger graduate may consider stay out of country due to limited of option or opportunity as cost of living is a big challenge for those who intended to build a family here, therefore, it is one of the factors cause of brain drain issue. therefore, with the current situation after government had implemented a series of cooling measure, it is moving toward a good direction for buyer or consumer market instead of developer takes control of the market. my 2cents.

    1. Ang, i am afraid that the blogger is right and ur wrong
      good luck bro

      1. Hi Sumit, everyone has their own interpretations and I sincerely do not think anyone can claim they are right. It is what makes this world so interesting. If everyone wants to buy just one car, life would be so boring.

    2. Hi Ang, thanks for comment. In terms of property bubble, I personally do not think so. However, overpriced properties, yes there are a lot. Thats why you see so many developers going for affordable property projects or changing their plans. Some are delaying their launch. for property bubble to happen, there has to be an increase in every type of property, both new, secondary and everywhere. Today however, in a lot of places, further away, you can still buy condos for below rm300,000 or even landed for below RM400,000. It is hard to imagine that prices for these places to drop further than current. As for youngster staying away, I hope that young graduate can become someone important in whatever country they chose to be. If they are there working for ten years but cannot even afford a property or is not even a manager yet, I think their decision is wrong. As for brain drain, be reminded while Malaysians flock to Singapore but in every survey, over half of all Singaporeans aspire to work / migrate somewhere else. Ironic? I believe I am very slightly above average in terms of qualifications and I am still here. Well, one brain drain saved. Haha. Yes, I hope that there’s a correction in the market too. 🙂

  2. Hi Chialih,
    Thanks for your comment and reply, yes, you are correct, property price is quite high for certain area especially prime location, however, based on my observation, the market is quite in the manner of speculative. it seems like every time go to property fair, it is always being told by developer, this project is almost sold out and left with very limited unit, personally, i really have a doubt of the fact, initially, i may agree with that, gradually, i am noticed that most of the time its pattern is standard, this phenomenal is that the market is likely to be speculated. nowadays, everyone is singing, property price is always trending up for sure, if you are not buying now, you won’t able to get the same price in next 2-3 years with regret. however, if you measure it by looking at the affordability vs income, it is getting far apart, for a condominium 450- 600 per sqf of 1100 sqf for at least 600k above which will led you to a 30 years mortgage loan of monthly installation RM2600, so, this installation mortgage has to be kept in this threshold by max 30% of your overall income, by calculation, the total salary must at least seven thousands plus as net income, bank will evaluate this criteria before loan is approved. therefore, i foresee, market is slowing down.. with a series of cooling measure in place as well as tightening of loan application.
    Brain drain issue is happening every where, depending on the severity. as you mentioned, it is over half of all Singaporeans aspire to work / migrate somewhere else, i fully agree with your statement as it is the fact that happen in my surrounding. in my opinion, it might be some reasons they feel not happy with, nevertheless, this is known issue also in Malaysia, i will not elaborate as it is out of topic : ) we leave it to authority to solve it as i noticed that there are a lot of change in Penang especially in industry area (south west), moreover, the new opened second bridge will boost up the economic for two side of area (mainland and Island), Penang government is trying to attract a lot of Foreigner investment to setup their business in Island and mainland which indirectly will create a lot of job opportunity, i think it might be pull factor for our talent going back to country, and property market will only be boosted with the sustainable business and healthy economic, my 2 cents.

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