Local property market may take time to recover

The local economy and property market may take time to recover, given the loss of income and employment brought on by the Covid-19 pandemic.

PropertyGuru Malaysia country manager Sheldon Fernandez said the property market is still facing the effects of the Covid-19 pandemic and it has impacted the market performance in the third quarter of 2020 (Q3 2020).

“The impact of the Covid-19 outbreak is undeniable, and it will take time to get the economy back on track as many Malaysians struggle with the loss of income and employment,” he said.

Despite the pandemic, Fernandez said a recent study by the firm showed that up to 81 per cent of the Malaysians whom it surveyed have the intention to own their own homes by 2021.

He also said there is more interest in properties priced below RM700,000.

“Many are eager to upgrade or pursue bigger spaces after the discomfort experienced during the lockdown,” he said.

Based on the PropertyGuru Malaysia’s Property Market Index (MPMI) report, the overall new property supply rebounded and has increased by 19.8 per cent in this quarter.

A 10.14 per cent growth was captured on a year-on-year basis, an indication of an upward moving trend.

Fernandez said this inclination reflects the easing of the Movement Control Order (MCO) in the first half of the year, with the return of commercial activity.

Overall, Selangor recorded the largest increase in the supply of new properties by 23.55 per cent this quarter.

“Market watchers continue to be confident of the state’s long-term prospect, despite it facing the second-largest overhang in the country,” added Fernandez.

The supply growth follows with Penang (20.3 per cent), Kuala Lumpur (14.39 per cent) and Johor (18.36 per cent) rising quarter to quarter.

Fernandez said Johor is still facing the largest overhang in the country, with 6,166 unsold completed units in the market.

The state also registered the sharpest drop in asking prices, he said.

“Nevertheless, the downward trending price might be favourable for Johor as it may appeal better to the domestic market, which has seen an increase in its online activity on the region’s properties,” Fernandez said.

Kuala Lumpur on the other hand is going through a challenging period with weakened interest from foreign investors leaving an unsold upmarket stock that is mismatched with local appetites and affordability range.

Based on the National Property Information Centre (NAPIC) Property Market Report, H1 2020, Malaysia’s residential overhang increased 3.3 per cent to 31,661 unsold completed units worth RM20.03 billion during the first half of 2020, compared to the 30,664 units valued at RM18.82 billion over the same period last year.

“All does not look bleak as there are factors in place to mitigate the risk of financial stability, whereby Bank Negara Malaysia is extending 80 per cent of loans for homes that are owner-occupied. The extension substantially reduces the likelihood of borrowers defaulting on their loans,” Fernandez said.

Moving forward into 2021 with a climate of lower property prices, Fernandez expects there will be renewed interest and activity among younger buyers who have been actively saving for a property purchase.

According to him, certain hotspots in key interest areas have shown a spike in website traffic.

Source: NST