Property asking prices may stabilise at the current low, before gradually moving upwards again in tandem with the progress of the national vaccination programme, says PropertyGuru Malaysia country manager Sheldon Fernandez.
Fernandez believes savvy investors and home seekers may see the current climate as an opportune moment to purchase prime property at attractive prices while taking advantage of the current low-interest rates and financial incentives offered by developers and the government through the Home Ownership Campaign (HOC).
The government has extended the HOC incentives until the end of this year to support homebuyers looking to purchase property as well as contribute to the recovery of a negatively impacted property market.
Fernandez said the HOC extension is expected to keep demand alive among financially sound home seekers and investors.
According to PropertyGuru’s latest Malaysia Property Market Index (MPMI) report, the overall property supply in the market surged by 34.53 per cent year-on-year (YoY) and 11.94 per cent quarter-on-quarter (QoQ) in the second quarter of 2021 (2Q 2021).
This data, which is tracked based on property listings on the PropertyGuru platform represents the highest volume of YoY supply growth recorded in two years.
Fernandez believes that the surge in property supply is likely driven by an increase of homes being put up for sale in the secondary market amid the current ongoing Covid-19 pandemic and economic climate.
He said this upward trend in property supply is observed across four key regions covered by the MPMI, namely Kuala Lumpur, Selangor, Penang, and Johor, and it showed a YoY increase of 16.91 per cent, 48.95 per cent, 40.32 per cent, and 17.47 per cent respectively.
“This pandemic has caused many Malaysians to lose income whether it’s due to pay cuts, furloughs, or layoffs. While the introduction of a six-month moratorium on bank loan repayments will offer some measure of relief to some, those who are cash-strapped may still resort to selling their properties.
“As such, we may see more residential supply making its way into the secondary market, resulting from those who wish to cash out on their property investments to alleviate current financial burdens,” said Fernandez.
Fernandez further said that property supply volume from the primary market may be affected in the coming quarter, due to the implementation of a total lockdown nationwide in June 2021.
Data from the National Property Information Centre (NAPIC) revealed that the number of newly launched residential units dropped significantly from 14,865 units in 4Q 2020 to 5,919 units in 1Q 2021.
Fernandez said the prolonged Covid-19 situation has significantly impacted the property market, as reflected in the asking prices of primary and secondary property markets tracked by the MPMI.
The PropertyGuru Malaysia Property Asking Price Index has been on a declining trend since 2Q 2020, with a YoY drop of 2.16 per cent, coinciding with the onset of Covid-19 cases, and the implementation of Movement Control Order (MCO) restrictions.
While certain sectors of the market initially showed some measure of resilience, the extended restricted environment, growing economic hardship, and weak consumer sentiment have contributed to sustained downward pressure on prices over the past four quarters.
“A point of consolation is that house prices may have plateaued at their lowest point, given that existing building costs allow very little room for further drastic dips. Illustrating this, the MPMI found that the Price Index saw no quarterly change between 1Q 2021 and 2Q 2021, holding steady at 87.86 points,” said Fernandez.
He said in three of the four key markets covered by the MPMI, positive growth was observed for asking prices in 2Q 2021, indicating some form of price stabilisation for Kuala Lumpur, Selangor, and Penang. Asking prices moved upwards by 1.56 per cent QoQ in Kuala Lumpur, 1.18 per cent QoQ in Selangor, and 0.95 per cent QoQ in Penang.
Johor was the only state that registered negative growth, dipping slightly by 0.15 per cent QoQ in 2Q 2021.
“With the uncertainty surrounding the new Delta variant of the virus and the rising infection rates across the country which has led to a fresh wave of lockdowns, we believe that the property sector outlook will remain gloomy for the rest of the year,” Fernandez said.