PropertyGuru, Malaysia’s No. 1 property website, announced that its latest Malaysia Property Market Index (MPMI) report registered a downtrend in overall asking prices by 0.84% QoQ and 1.79% YoY – to 87.86 index points – in the first quarter of 2021.
This dip may be attributed to buyers’ apprehension as they take a wait-and-see approach due to the resurging COVID-19 infections and the imposition of a second Movement Control Order (MCO 2.0) which impacted commercial activity.
“With the backdrop of pandemic-related economic uncertainties, we believe that the market sentiment will remain cautious as the property market is expected to see fluctuating price trends in the coming months. However, the increased rate of vaccinations across Malaysian society is expected to bring more stability and improve consumer sentiment as the year progresses,” said Sheldon Fernandez, Country Manager of PropertyGuru Malaysia.
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He added that the government’s plan to extend the Home Ownership Campaign (HOC) till the end of 2021 is also a welcomed boon to the market, as it will continue to play an important role in spurring buyer interest as economic conditions begin to improve across the year.
“The HOC has proven to be an effective stimulus to the economy and it has undoubtedly helped to reduce the burden of house buyers during this difficult time. If the government does decide to extend the duration of the HOC until this year end, we encourage home seekers to take advantage of the available incentives, current low prices, and conducive interest rates,” added Sheldon.
Price Corrections Observed In Kuala Lumpur, Johor, Penang
In Kuala Lumpur, Johor, and Penang, the overall asking prices dropped by 0.66%, 0.29%, and 1.36% respectively QoQ, while Selangor sees asking prices remain in the positive territory at 0.01%.
In Q1 2021, Kuala Lumpur’s YoY asking price dropped by 5.00%, the highest recorded dip since PropertyGuru launched its market index in 2016. This more than two-year downtrend is now being accelerated by the pandemic and can be seen as a price correction trend that began following a challenging economic period and highly-priced mismatched property offerings.
This similar downward trend in asking prices is observed in Penang and Johor as well, both of which have witnessed a long trend of downward price movement since Q1 2019 and Q4 2017 respectively.
“The property prices in these key markets are stabilising and adjusting to a more affordable range, and the continuous decline in asking price makes this a buyer’s market now. The price corrections across KL, Johor, and Penang represent strong opportunities for the investment and purchase of properties,” said Sheldon.
He added, “Despite the current challenges, Johor has strong potential for the future due to its symbiotic relationship with Singapore and the geographic advantage it offers in terms of lower-priced properties. Meanwhile, Penang is often seen as the place for retirement for Malaysians and foreigners alike. It was recently ranked by Travel Awaits as the third best island in the world and first in Asia to retire in 2021.”
According to MyPropertyData, Malaysia’s largest online property data company under PropertyGuru, investors make up 79% of the property transaction in Malaysia last year, an increase of 38% from previous year. The price correction trend observed in KL, Johor, and Penang may continue to spur this growth.
On the other hand, Selangor’s resilience in the current crisis environment is boosting confidence in development activity in the state. This comes after a sharp decline in the number of total residential property transactions in Selangor between 2019 and 2020, as reported by MyProperty Data. The total number of transactions in 2020 for various property types in Selangor such as terraced houses, condominiums/apartments, flats, semi-detached houses, and serviced apartments have decreased between 41.18% and 61.67%, as compared to 2019. This is a common trend across most markets in Malaysia due to the uncertainty brought about by COVID-19.
Selangor’s resilience and stability amidst this crisis can be attributed to its robust population growth as well as its position as the most economically vibrant region in the country.
Property Supply Not Hampered By COVID-19
While the overall asking prices in Malaysia have dropped both on a QoQ and YoY-basis, in contrast, the MPMI found that the overall supply listings tracked on PropertyGuru saw a growth of 2.71% QoQ. It also recorded a spike of 15.85% YoY in Q1 2021, the highest growth since Q1 2020, indicating an upward trend. In Penang specifically, the state recorded the highest spike in yearly supply volume, registering a 34.17% YoY increase, and a 1.19% QoQ gain – a positive growth for the third consecutive quarter.
The robust turnaround of supply volume in key regions in Malaysia is likely due to the government’s decision to allow the construction and property development industry – along with other vital sectors – to continue operating during recent periods of heightened movement restrictions. This indicates that developers are confident that recovery is on the horizon.
Sheldon said, “While the current environment of once-again eased restrictions offers room for improvement in Q2 2021, the property market is expected to put in a mixed performance for the duration of the year due to persistent uncertainties. However, we believe that consumer confidence in the property sector will regain as we progress through 2021, supported by a strong vaccination programme and favourable government incentives.”