PropertyGuru DataSense, the data, analytics, and solutions arm of PropertyGuru, recently shared a property market update highlighting residential trends in Q1 2021.
It revealed that residential property transactions had dropped by 44.7% Year-on-Year (YoY), compared to Q1 2020 before the spread of COVID-19 caused an economic downturn.
Conversely, 80% of correspondents who took part in PropertyGuru’s Malaysia Consumer Sentiment Study H2 2021 said that they were still on the lookout for properties, despite the prolonged pandemic.
From this, 45% of correspondents cited ‘investment’ as their reason to purchase a home.
To help revive the property market, the government is currently offering incentives such as extending the exemption of Real Property Gains Tax (RPGT).
Top 3 Areas With The Highest Appreciation For Q1 2021
In general, mature areas with ready amenities like healthcare, schools and public transport will likely enjoy good capital appreciation.
Property Advisor’s analysis of residential transactions carried out in Q1 2021 revealed that the top three areas with the highest YoY appreciation from Q1 2020 to Q1 2021 are Puchong, Kajang and Ipoh, which saw an increase of 38.68%, 36.36% and 30.32% in median prices respectively.
For starters, Puchong is a matured and well-developed region with all the amenities needed to be a self-sufficient township.
“Over the years, property prices in Puchong have increased marginally. The majority of the landed residential schemes can ensure steady capital value growth in the long run,” said Amy Wong, director of research and consultancy, Savills Malaysia.
In Kajang, the railway station is the principal rail station and functions as the interchange for the mass rapid transit (MRT) Sungai Buloh-Kajang Line, Seremban Line, and KTM Electric Train Service (ETS).
Kajang’s property value is further boosted by its education and medical centres, as well as lower cost of living compared with the town areas, explained Regina Ng, senior real estate negotiator, The Roof Realty Sdn Bhd.
Finally, as the state capital of Perak, Ipoh is a popular domestic tourist attraction known for its delicious food and stunning views of the limestone hills.
Besides being an excellent place to set up a homestay or AirBnb, it appeals to the older generation. The traffic is less congested than in other big cities, making it ideal for retirement.
Once the West Coast Expressway opens, towns like Klebang and Tambun will enjoy better accessibility, leading to expected improvement in property demand in areas along the highway, thus making them ideal investment locations.
Despite the pandemic, Shah Alam, Cheras and Klang have also witnessed positive growth in their median prices. In East Malaysia, Kuching saw the highest appreciation of 27.27% YoY from Q1 2020 to Q1 2021.
How The Home Ownership Campaign (HOC) Aids Investment
*HOC has ended on 31 December 2021
The Home Ownership Campaign (HOC) was first introduced from 1 January 2019 to 30 June 2019. It was later brought back under the Pemerkasa aid package, and extended until 31 December 2021.
There is no limit to the number of houses that one can purchase under the HOC. To qualify, one must ensure that their Sale and Purchase Agreements (SPA) are stamped between 1 June 2020 and 31 December 2021. This applies to all residential properties ranging from RM300,001 to RM2.5 million.
Aside from encouraging those who do not yet own a property to purchase their first home, the HOC helps investors who already own residential properties, as it lifts the 70% margin of financing limit applicable for the third housing loan onwards (for properties valued at RM600,000 and above).
Some financial institutions help investors diversify their portfolios by offering financing terms from as high as 90% + 5% p.a. for the first three homes.
How Do I Finance My Home?
Before committing to a property purchase, you should check your Debt Service Ratio (DSR). This is the ratio of total debt to one’s household income.
It is calculated by dividing your nett income with your total monthly commitments and future mortgage loan.
Your DSR will help you determine which financial institution’s offer you should consider taking up a loan from, as different financial institutions have different DSR requirements.
This is important as their mortgage products vary in terms of interest rates and flexibility. With the Overnight Policy Rate (OPR) currently at an all-time low of 1.75%, it is recommended to take a housing loan while the rates are low.
This is because if you take out any loan after the OPR decreases, it will cost less for you because of the decrease in the loan’s interest rate.
Or take a flexible loan*, where you can put additional money into your loan account to reduce the interest on your principal amount. If you require the excess funds, you can easily withdraw them from your account.
*Note: As flexible loan products vary across different banks, it is recommended that you check with the bank to better understand the features available.
It is important to remember that all investments, including property investments, come with risks. A profitable sale can sometimes take months or years to happen.
If you need cash in a hurry, you may find yourself in a bind. Another point to consider is the upkeep of investment properties.
Although you may not be staying at your property, you will still need to keep the place looking presentable for potential tenants or buyers.
This means you will need to continuously invest in its upkeep. One good way of saving is making sure that you get the best housing loan package.
Do your research: Survey the market, make inquiries, list down the pros and cons of each housing loan package before deciding on which to take up.
One housing loan offer that you should consider is Alliance Bank. The bank is now offering loan rates as low as 2.9% p.a. for all home buyers, whether your first, second, or third purchase.
Relevant Guides:
-
Interest Rate Is Down (OPR Cut)! Should I Buy A Property Now?
-
How To Buy A New House in Malaysia: 10 Simple Steps!
-
4 Pros And Cons Of Buying A Property Near LRT And MRT Stations
Keep Track of New Launches
Visit our new launches page to find the new launch project of your dreams and submit an enquiry today.
Disclaimer: The information is provided for general information only. PropertyGuru International (Malaysia) Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.