Asking prices up in Selangor

There was a 1.05 per cent increase in the asking prices for properties in Selangor, propping up weaker performances in Penang, Johor and Kuala Lumpur, according to the PropertyGuru Malaysia Property Market Index.

It also showed an 8.7 per cent rise in enquiries for properties in Perak, particularly Ipoh and Taiping.

The market index rose to 89.80 points in the second quarter of 2020, up from 89.46 points in the previous quarter.

While the incoming supply index took a dip by 3.6 per cent, this was a substantial improvement over the 10.47 per cent drop in the first quarter of 2020.

PropertyGuru Malaysia country manager, Sheldon Fernandez said Selangor’s price index increased from 93.20 points in the first quarter of 2020 to 94.18 in the second quarter.

“This, coupled with Kuala Lumpur’s 1.28 per cent drop from 96.62 points to 95.38 points over the same period, points towards a dispersion of interest from urban areas to city outskirts and satellite townships,” he said.

Fernandez said Selangor’s growth buoyed weaker figures not just in Kuala Lumpur, but in Penang and Johor as well, which saw prices decline slightly by 0.17 per cent and 0.61 per cent respectively.

He said the largely sideways movement in major markets came despite projections of property price drops due to weak sentiment and industry restrictions following the Covid-19 outbreak.

“Price resilience here mirrors situations in regional markets, with sellers balking at price reductions, particularly in the auction space. However, this came with corresponding impacts on transactions, as buyers opted out of purchases in anticipation of future price drops,” he said.

According to him, such price drops are strongly indicated by factors such as rising unemployment and a projected contraction in the gross domestic product, both of which have been linked to property price movements in the past.

“With the 1997/8 recession and Nipah virus outbreak as a worst-case scenario, we project an upward limit of 10 per cent on price impacts, with discounts under the reintroduced homeownership campaign driving immediate change here,” he said.

Meanwhile, the supply index in the second quarter of 2020 fell 1.98 per cent year-on-year.

Fernandez said this declining contraction rate was evident in Kuala Lumpur, Selangor and Penang.

Selangor was the only market to showcase year-on-year supply growth in the second quarter of 2020, with its supply index rising 5.12 per cent relative to the same quarter last year.

In contrast, Johor was the only market where the incoming supply contraction rate rose quarter-on-quarter, from 8.09 per cent in the first quarter of 2020 to 9.18 per cent in the second quarter.

“This decline reflects large market corrections in the southern state, which has traditionally relied on incoming investment for growth. Global trade tensions and the Covid-19 outbreak have impacted international investor appetite, as seen in recent price and supply movements in Johor. This places it on a healthier footing to cater to domestic demand, and it is the third highest location for property searches and enquiries in Malaysia now according to PropertyGuru data,” said Fernandez.

Source: NST