KUALA LUMPUR, Jan 20 — Property prices are expected to experience a “moderate drop” this year as demand dwindles and auctions of foreclosed properties add to the existing oversupply, industry experts said today.

James Wong, organising chairperson of the 9th Malaysian Property Summit, explained that 2016 will be “challenging” as many will be affected by the economic slowdown and the higher cost of living, which may result in some buyers holding of and developers reducing their launches of new properties.

“If you look at primary market transaction, there’ll be less launches this year, take-up rate will be lower, the oversupply that is in the property market, the overhang, will build up if you talk to the banks more auction and foreclosures of properties this year,” Wong said during a press conference here today.

“For first 3 quarter last year, it was 8 per cent drop... We are not expecting a recession, we’re not expecting a property bubble, but there will be a moderate decline and a decrease in the property market but unlikely that there’ll be a double digit decline in property prices,” he added.

On top of the declining property prices, developers will also be offering various perks to entice more buyers despite Bank Negara Malaysia’s discouraging the practise, he said.

He also said developers will likely stagger their launches in order to control the supply of new property entering the market.

“This year expect developers to offer freebies. Free legal fees, all not allowed but developers will have ingenious way of promoting their property and will come up with all kinds of way of selling their property,” he said.

Developers will also shift their focus to building more mid-priced homes, albeit in smaller numbers, instead of maintaining the previous practise of targeting high-end properties which are more profitable, the president of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS) said.

He also anticipated the secondary property market, the sale of existing property by homeowners rather than developers, to drive the market this year.

“One thing we can all see is primary market will not drive the market, secondary market will spearhead the market that’s where prices will be seen,” he said.