Rehda: Most developers planning to launch lower-priced houses

PETALING JAYA: The majority of property developers, who are pessimistic about the market in the first half (1H) of 2017, are planning to launch houses priced RM500,000 and below during the period, said the Real Estate and Housing Developers’ Association Malaysia (Rehda).
According to data extracted from Rehda’s Property Industry Survey 2H 2016 & Market Outlook 1H 2017, developers in most states are launching houses priced between RM200,001 and RM500,000 in 1H 2017.
Developers in Selangor and Kuala Lumpur are planning to launch houses priced between RM500,001 and RM1 million while in Johor and Penang, developers are planning to launch houses priced below RM200,000.
Rehda president Datuk Seri FD Iskandar said developers are building smaller units in order to sell at lower prices but on a per square foot (psf) basis, prices have not moved much.
“It is very difficult for property developers to lower prices because costs keep on going up, what with the recent announcement on steel bars and also increase in the labour index, and fixed costs are always there. Compared with five years ago, more and more developers’ margins are being squeezed,” he told reporters at the survey briefing yesterday.
About 56% of the 165 survey respondents reported cost increases of up to 10% with major cost components affecting cash flow being materials, labour and compliance costs. Rehda has 1,000 members.
Overall, 55% of respondents said they have planned launches for 1H 2017, with most of them looking at residential units. These developers plan to launch 12,170 strata units, 9,426 landed homes and 303 commercial units in total.
Although the number of planned launches is higher than the total 13,276 units launched in 2H 2016, 67 respondents are anticipating take-up rates of 50% or less in 1H 2017 while 20 respondents expect sales of 51-75% and only three respondents expect to sell above 75%.
Of the 13,276 units launched in 2H 2016, only 5,973 units were sold. The majority of the residential units launched were priced at RM200,000 to RM500,000 (40%) and RM500,000 to RM1 million (38%).
The survey also showed 72% of respondents holding unsold units, a slight increase from 71% in 1H 2016. This is much higher than the 62% reported in 2H 2015. About 72% of respondents had unsold units priced between RM200,000 and RM1 million.
FD Iskandar said this is a worrying trend and Rehda members are taking longer to sell their properties although there is demand, as buyers take a longer time to obtain loans. In addition, buyers have a lot more choices today.
“In the past, developers took two to three days to sell but now, it takes up to six months,” he said.