The rate of property transactions likely dropped in 2014 following two years of heady growth, according to experts.
While 2012 and 2013 saw an unprecedented boom in buying, concerns the market may be overheating and government moves to curb runaway prices together dampened purchases.
Phoenix real estate agent Ko Htun Htun said he reckons purchase volumes were down about 50 percent in 2014 compared year-on-year.
“2014 was not a good year for the property market,” he said. “Land dealing slowed, and there was some turmoil – but next year should be better.”
The year had started strong, particularly in Yangon’s outskirts, industrial zones and government projects, but even there transactions have fallen off.
There were also significant speculation bubbles, including the mysterious Yangon New City craze begun in August when Yangon Region mayor U Hla Myint announced a massive greenfield project was to be built to the city’s southwest, including 20,000 homes and six large bridges on 30,000 acres to the west of the city between the Pan Hlaing River, Twante Canal and Hlaing River.
Critics jumped on the plan and the mayor subsequently said the project is on hold, though not before property in the southwest rural townships shot up in value, often by multiples of three or four in just a few weeks.
Other government moves had a calming effect on the market. Some experts say standardising property values used to assess taxes on property transactions had the effect of slowing the market. Previously, the tax was charged as a percentage on a property’s declared value, though this opened the door to some declaring too-low values. In 2013 the government changed to a system where each Yangon neighbourhood had its own value that was used automatically to determine the tax, though the values themselves were changed again in October 2014.
“After the government made the values higher for property tax, the market suddenly slowed down,” said U Khin Maung Aye, an agent from Shwe Kan Myae real estate. “Dealers are no longer looking to buy land and some want to sell out quickly.”
Another factor behind the recent property market slowdown are the astronomical prices. Some property, such as high-grade office space, rivals the most expensive units in places like Singapore and Manhattan, and nearly all property values in Yangon have seen significant increases over the past years.
“High land prices is one reason the market has paused. Land values are high and they are not backing off, and the land prices and market are connected to each other,” said Ko Htun Htun.
High land prices discourage investment, he added.
It is no coincidence that areas with the most trading are also the areas with lower land prices. While lots in downtown may cost over K1 billion (US$1 million), some townships like Thingangyun have lots selling for about one-10th the price. Even further afield areas, like North Dagon township, have been hit by high prices.
Earlier this year, outskirts like North Dagon had strong transaction markets. There used to be interest from dealers, but when land prices got high enough, transactions again began to slow down.
A cool market is a departure from 2013, when downtown areas were seeing prices rise, but investor interest continue unabated. Declining transactions may show that prices have peaked, at least for now.
While the sales market has slowed, the leasing market has seen continued growth, as more and more people look for space in the city.
Ma Myat Thu, an agent at Moe Myint Thaw Da real estate, said much of the interest is driven by foreigners, with housing and office space rents still expensive. She said it is unlikely the rental market will slow, given the influx of people coming to Myanmar.
The coming year is hard to predict. While there is talk of a bubble, it’s also true that in many areas, demand outstrips supply. Changes in government policy, such as the Yangon New City rollercoaster, are also hard to foresee.
Government officials have recognised an overheated property market may dissuade development, and are looking at ways to address concerns.
What’s clear is the property sector will continue to be a centre of speculation in 2015.
Source: MYANMAR TIMES