KAJANG (April 18): The property market continued its softening streak in 2016, with an 11.5% decline in transaction volume and 3% drop in value, according to the latest Property Market 2016 report published by the Ministry of Finance's Valuation and Property Services Department.

Overall property transaction volume dropped to 320,425 in 2016 from 362,105 in 2015, while overall transaction value dropped by 3% to RM145.41 billion from RM149.96 billion, data from the report showed.

"I must emphasise that this is a pertinent issue that must be addressed by all parties, particularly local authorities and property developers. Both must exercise due diligence before arriving at development decision to avoid oversupply situation," Valuation and Property Services Director-General Dr Rahah Ismail said after launching the report here today, together with Deputy Finance Minister Datuk Othman Aziz.

Last year, property transaction volume continued to be driven by the residential sub-sector, dominating the overall market, contributing 63.4% to the country's property transaction volume and 45.1% to property transaction value.

As market continued to soften, data from the report revealed the number of new launches declined to 52,713 units last year, which was a 9.8% reduction compared to 58,411 units recorded in 2015.

This translates to a lower sales performance, with 16,532 units sold in 2016, a 32.8% fall from 24,588 units sold in 2015.

"Notwithstanding [somewhat] higher launches, sales performance was discouraging," the report further noted.

The findings in the Property Market 2016 report also noted that "the slow market absorption also led to the increase in overhang", with numbers growing to 14,792 units worth RM8.56 billion in 2016, representing a sharp 43.8% jump in volume and 70.7% rise in value from 2015.

"Johor saw an increasing overhang market share at 24.8%, which [were] mainly made up of two- to three-storey terraced houses priced at RM500,000 and above," the report noted.

In the office and retail sector, data from the report showed "vacancy continued to increase", with Kuala Lumpur and Selangor recording a 16% increase to 2.74 million square metres (sq m) of vacant office space in 2016.

Vacant retail space also increased 11.9% to 2.7 million sq m in 2016, the report noted.

On property market outlook, Rahah expects the market to remain soft in the next couple of years, supported by various property-related incentives and accommodative monetary policy.

"The 2016 conundrums are expected to reverberate into 2017. It would be expected that the property market would take a breather in the next couple of years before it could make a comeback," Rahah added.