Demand will continue to push property prices up

Strong foreign and local demand will continue to push property prices up in Penang.

Real Estate Housing and Developers’ Association (Rehda) Penang chairman Datuk Jerry Chan said developers had no choice but to sell their projects at market prices.

“People are grumbling that prices are rising too high, too fast but we have to buy land at market prices and there is no such thing as cheap land in the state any more — land prices have just skyrocketed.

“With stronger demand expected next year from Penangites working here and overseas as well as from foreigners, the property market will do as well if not better than this year.

“So, current property prices are really a true reflection of demand and supply — the high prices are not because developers are greedy,” he said, adding that the developers’ profit margin was “not that high.”

Chan, who was speaking during Rehda 2011 property market briefing here yesterday, said second-hand property units in prime areas were priced even higher than certain new developments.

Refuting speculation that the property market bubble was in danger of bursting, he said property prices had never crashed.

“There is no bubble — the supply isn’t that much greater than the demand.

“People lament the high property prices but if you compare the ratio of car prices to houses, the ratio in Malaysia is very low.

“In fact, compared to Klang, Johor Baru and other countries in the region, houses in Penang are not that expensive,” he said.

Chan said property prices on the mainland were “playing catch up” with the island and the disparity was about five times.

He added that developers opted to build super condominiums rather than more affordable housing because of constraints posed by government guidelines.

“Low density, low build-up and location are just some of the problems that are forcing us to resort to building high-end property units.

“Developers need greater freedom and flexibility because land on the island is scarce.

“The state government must look at whether it is going to allow more land reclamation, identify more housing development sites on the mainland and review its hillslope development guidelines,” he said.