Fewer Malaysian homes sold in 2006 as rates rise

Fewer Malaysian homes sold in 2006 as rates rise

Number of transactions down 3%, but sales value up to RM28.7b


(KUALA LUMPUR) Malaysian developers sold fewer homes in 2006 as sales at new projects slumped for a fourth year, their worst performance since 2002 amid higher interest rates and a property glut.

The property market ... is expected to remain resilient.
- Valuation & Property Services Department

The number of transactions fell 3 per cent to 176,277 last year from 2005, while the value of sales rose to RM28.7 billion (S$12.7 billion) from RM28.41 billion, the Valuation and Property Services Department said in a statement.

Malaysia, which is reviving home sales after the central bank lifted its key interest rate three times between November 2005 and April 2006 to curb inflation, this month removed a three-decade-old capital gains tax on property transactions and allowed foreign investors to take on more mortgages. 'Considering all the concerted efforts taken by the government to stimulate the national economy, which would have direct or indirect impact on the property sector, the property market on the whole is expected to remain resilient in the coming year,' the statement on the department's website said.

Malaysia's biggest developers include SP Setia Bhd, IGB Corp and Sunrise Bhd.

The number of unsold homes jumped 31 per cent to 25,645 units, while the value surged 59 per cent to RM4.2 billion last year.

The southernmost state of Johor had the highest number of unsold homes at 8,215 units, followed by the central Selangor state's 5,233, the department said. The government also said last week that it will accelerate development approvals and property transactions, in a bid to cut red tape and draw more investment to the country.

Developers offered 38,526 new units last year compared with 57,290 in 2005, the Valuation and Property Services department said. The percentage of homes sold at new projects fell to 40.6 per cent, from 46.2 per cent in 2005. In 2002, the take-up rate was 54.7 per cent. - Bloomberg