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Tuesday, April 7, 2009

High-end property market may stabilise next year

The value of high-end properties, which has been on the decline by five to 15 per cent as a result of the current economic downturn, may stabilise when the economy recovers, according to an industry player.

"High-end properties will start to correct by next year, when the economic conditions recover. We expect it to be either stable or flat. It won't be down anymore but will slowly go up again," said Ho Chin Soon of Ho Chin Soon Research Sdn Bhd.

He said despite the current situation, some high-end properties were still able to command good prices, citing those in the KLCC area which went up by more than 15 per cent.

Ho said though the overall demand for the high-end properties has declined, the situation will correct itself over time.

"A lot of developers are holding back their launches, so there will be less supply and after some time, the demand and supply situation will correct itself," he said.

According to Ho, the developers will usually change their layouts during an economic downturn to offer more lower-end properties to keep their operations going.

As a result, the demand for low-cost and middle-cost properties has remained stable despite the current economic conditions, he said.

Ho also said that the recent interest rate cut by Bank Negara Malaysia was expected to boost demand for properties, especially for lower-end properties.

"During conditions like this, some developers will change their layout to more lower-end properties. When the condition stabilises, they will change back to high-end to meet the demand for such properties," he said.

For lower-end properties, Ho said: "From October last year until last month, we saw no downside. Asking prices are still very strong."

By Bernama

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