PETALING JAYA: The growth in house prices could continue to moderate until next year due to the high incoming supply, benefiting potential house buyers, said AllianceDBS Research. “Property sales will be pressured by the challenging environment, although prices will remain firm because of cost-push factors. The strong house price appreciation over the past few years, largely driven by cheap liquidity, is unlikely to recur in the near future. “What is working in potential house buyers’ favour is that incoming supply will be the highest in 10 years. Therefore, house price growth could continue to moderate until next year,” it said in its industry focus report yesterday. According to data from AllianceDBS and the National Property Information Centre (Napic), the number of unsold stock stood at 66,972 units as of 2014. Of this, 55,156 units were under construction and 11,816 units were completed but unsold. The research house said the property market is now facing more challenging conditions largely due to stricter lending controls and poor housing unaffordability. Property prices are still rising but at a slower pace since 2H14 and sentiment is cautious but demand from genuine homebuyers remains robust. Although property sales are normalising, future property launches could see slow take-up rates similar to the situation before 2011 when projects took two to three years to be fully sold. “The removal of speculative fervour in the property market will also position developers for a healthier market over the long term. We expect property development projects in prime locations with attractive pricing and selling points will continue to do well despite the softer sentiment,” it said. AllianceDBS said the weak sentiment was mainly due to slower housing loan approvals as developers face difficulties in converting initial high bookings into sales despite keen interest from potential buyers. “There had been a lull in launches prior to Goods and Services Tax implementation in April because of relatively weak sentiment. But launches have picked up over the past two months as developers focus on achieving sales targets, while buyers are adopting a wait-and-see attitude amid oversupply concerns. Hence, we expect sales to shrink year-on-year for most developers under our coverage; some have revised down their FY15 sales target,” it added. To mitigate the impact of weak sentiment, developers have been incorporating more affordable homes in their launch pipelines. Absolute property prices have been kept low as developers offer smaller built-up units. “Value for money” properties priced below RM700,000 at different property hotspots near public rail stations such as Kajang/Semenyih and Salak Tinggi-Cyberjaya corridors continue to be well received, especially township developments with lifestyle amenities. However, pricing will remain a major determinant of sales because of accelerating supply over the next two years. The risk of a property bubble is contained by favourable demographics, namely a young and growing population, increasing urbanisation and shrinking household size, AllianceDBS said. There is no risk of a property bubble as prices are likely to remain firm despite the challenging market, largely due to cost-push factors. “Nevertheless, house price index growth has been more subdued, rising 4.1% in 1Q15 compared with 9.6% in 1Q14. The healthy consolidation will improve the outlook for the sector,” it said. It added that the risk of a property bubble is also contained by Malaysia’s strong economic fundamentals and a robust banking system.