Asking prices in Q1 dip, fluctuations in months ahead: PropertyGuru index

PETALING JAYA: The property market is expected to put in a mixed performance for the duration of the year due to persistent uncertainties, after asking prices registered a downtrend in the first quarter this year with a 1.79% decline year-on-year (y-o-y) and 0.84% drop quarter-on-quarter (q-o-q), according to PropertyGuru’s Malaysia Property Market Index (MPMI).

“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.” said country manager Sheldon Fernandez.

The dip in Q1’21 asking prices may be attributed to buyers’ apprehension as they take a wait-and-see approach due to the resurging Covid-19 infections and the second movement control order (MCO 2.0) which affected commercial activity.

Fernandez believed that against the pandemic-related economic uncertainties, property market sentiment will remain cautious with a fluctuating price trend expected 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,” he said in a statement.

Examining the downtrend, the portal observed overall asking prices in Kuala Lumpur, Johor, and Penang have slipped by 0.66%, 0.29%, and 1.36% q-o-q, respectively while Selangor’s asking price remained in the positive territory.

For Q1’21, it highlighted that Kuala Lumpur asking prices saw a y-o-y drop of 5%, the highest since the MPMI was launched in 2016, as the pandemic accelerates a two-year downtrend which can be seen as a price correction stemming from a challenging economic period and highly-priced mismatched property offerings.

This trend is also observed in Penang and Johor which have seen a long trend of downward price movement since Q1’19 and Q4’17.

The country manager noted that 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. He outlined that the price correction in the three states represents strong opportunities for investment and purchase.

“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.”

The portal also observed investors making up 79% of property transactions in Malaysia compared to 38% in the previous year.

It noted Selangor’s recovery after a sharp decline in the number of total residential property transactions between 2019 and 2020 has provided a boost of confidence for the market’s resilience. PropertyGuru attributed the recovery to its robust population growth as well as its position as the most economically vibrant region in the country. In 2020, the state saw total transactions for various property types decline between 41.48% and 61.67% from the preceding year, a common trend throughout Malaysia due to the pandemic.

On the flip side, the index found overall supply listing tracked on the portal reported a 2.71% growth q-o-q and a spike of 15.85% y-o-y in Q1’21, the highest since Q1’20, indicating an upward trend. Penang saw the highest spike with a 34.17% y-o-y increase and a 1.19% q-o-q gain, a positive growth for the third consecutive quarter.

The portal surmised the turnaround is likely due to the government’s decision to allow the construction and property development industry to continue operating during recent periods of heightened movement restrictions.

Moving ahead, Fernandez welcomed the idea of an extension to the Home Ownership Campaign (HOC) until end-2021, as it is expected to spur buyer interest as economic conditions begin to improve. He noted that HOC has proven to be an effective stimulus that helped reduce buyer’s burden and should the government decide to do so, PropertyGuru encourages home seekers to take advantage of the available incentives, current low prices, and conducive interest rates.

Source: TheSunDaily