NEW STRAITS TIMES. 21ST DECEMBER: The long-term dynamics of the property sector are improving, and the housing oversupply issue is easing, which will, in turn, support a healthy increase in house prices, Hong Leong Investment Bank Bhd (HLIB Research) said.
According to the bank-backed research firm, the biggest stumbling block to a sector recovery is the labour shortage situation, which slows site progress and discourages developers from pursuing more aggressive launches.
“Near-term demand remains intact. However, there needs to be more visibility on longer-term prospects due to the fluidity of the global economy.
“Given such, we observed that the KL Property Index (KLPRP) is moving in lockstep with the bellwether FBM KLCI Index, closely tracking global economic developments.
“The KLPRP Index is currently trading at around -0.75SD (standard deviation) below its five-year mean price-to-book (PB) ratio, which we deem to be fair at this juncture given that the sector is not out of the woods yet,” HLIB Research said in a note today.
The research firm said property developers under its coverage registered commendable third quarter (Q3) 2022 results, with four coming in above expectations, three within, and one below.
When stacked against consensus, there were two above, five within, and one below expectations.
“The positive surprise mainly stemmed from stronger-than-expected sales, especially from completed or near-completion projects.
“In terms of sales, four developers are on track or have exceeded their full-year sales target, while four are lagging behind.
“For developers with sales trailing targets, this was mainly due to a slowdown in new launches for the year.
“Four out of eight developers have year-to-date launches well below their full-year target. The main reason for the slowdown in launches was due to supply-side issues, including labour shortages and volatile building material costs,” it added.
HLIB Research has maintained its ‘Neutral’ rating on the sector.