Malaysia Property Market Outlook 2021

In 2020, the COVID-19 pandemic was expected to cause an overall subdued property market. However, the Malaysian market performed better than expected in 2020, placing it in a good position to make positive gains in the coming year, albeit at a gradual and cautious pace.

And in 2021, the property market is widely expected to start recovering, on the back of a more positive outlook for the economy. The promise of a vaccine being made to the public during the course of the year will bring welcome relief on this front which will further determine buyer behaviour in 2021.      

Read the full report online or download a copy for later.

 

Report Highlights

  1. Looking Back at 2020
  2. Key Trends in 2021
  3. Macro Trends Hint Towards a Year of Recovery
  4. Big Property Bets in 2021
  5. Should You Buy or Sell Property in 2021?
  6. Conclusion
  7. Download Report

Looking Back at 2020

 

Undeniably, the most dominant factor behind market movement in 2020 – or lack of it – has been the widespread impact of the COVID-19 pandemic, including the severe movement and commercial restrictions that came with it.

However, of equal importance is how Malaysia reacted and responded to the crisis. A combination of quick-thinking policies by the government and innovative evolution by market players have helped cushion the blow.

Key moves by the government was the reintroduction of the Home Ownership Campaign (HOC), which includes Real Property Gains Tax (RPGT) exemption, stamp duty exemption, and the removal of the 70% margin of financing limit. Additionally, a six-month loan repayment moratorium beginning April has helped keep the lid on default rates.

These were expanded upon during the mid-year via the short-term National Economic Recovery Plan (PENJANA) worth RM35 billion, which included stimulus measures aimed at improving the overbuilt property sector.  

In addition, a series of Overnight Policy Rate (OPR) cuts by BNM four times this year to its current record low of 1.75% marks an unprecedented move.

 

 
 

This year’s cumulative 125 basis point reduction will continue to provide stimulus for the economy in 2021. This is good news for property seekers as continuous low-interest rates mean lower barriers to financing and owning a property.

 

These mega projects will complement upcoming residential and commercial developments within the vicinity and spur further development of rural areas resulting in a huge economic lift.  

The good news about HOC incentives is that it will remain in play for much of the first half of 2021. Exemptions on stamp duty on instruments of transfer and loan financing limits of above 70% being made available to the public until May 2021 will largely benefit first-time homebuyers to own a property.

Millennials, who are accustomed to e-commerce habits, are now mid-20s to late-30s and represent the largest segment of the house buying market locally. The digital and virtual trend is expected to grow in 2021 and beyond, as developers and real estate agents begin to understand and embrace the advantage of a strong digital presence as a long-term strategy.

 

Initiatives to increase homeownership among the B40 will allow private developers to focus more on free market housing while allowing the government to take the responsibility to provide more cohesive housing for the rakyat.

 

A key challenge for home seekers, however, will be qualifying for loans as financial institutions will be adopting a cautious and frugal approach until the overall economy stabilises.

Job and financial security are key factors that will shape consumer sentiment and buyer behaviour moving forward, given that the pandemic has already had a tremendous impact on corporate bottom lines and national GDP growth (which contracted by 4.5% in 2020).  

To this end, measures introduced by the government in Budget 2021 that increase employment opportunities, focus on training and upskilling workers, provide wage subsidies to preserve jobs, and incentivise companies to hire local labour will aid in shoring up consumer confidence in the coming year. 

 

Big Property Bets in 2021

2021 is a Buyer’s Market

While property transactions took a major hit in 2020, buying activity continued at a much smaller scale and property interest began to rise in tandem with the introduction of HOC initiatives as well as OPR rate cuts.

The residential sector will remain a buyer’s market in 2021, packed with further discounts, rebates and promotions from developers.

Klang Valley to Dominate As Preferred Place to Buy a Property

 

Analysis on consumer search intent in key states in the country saw that in 2020, a higher interest was seen in Klang Valley. On a month-on-month comparison, areas within Klang Valley remained the highest in terms of leads generated, indicating preferential interest in buying into Klang Valley.

Thus, Klang Valley is poised for further growth, still making it a desirable place to buy and live in.

Other Key Hotspots to Lookout in 2021

Based on 2020’s search intent, these key hotspots are likely to spill over in 2021 for being preferential and desirable locations to search for a property.

 
 
 
 

Terraced Homes Most Preferred by Malaysians

Double-storey terraces were the most preferred choice in 2020, leading the way most of the year as the most sourced and purchased property type.

 

According to the Malaysia Consumer Sentiment Study, the continued preference for terraces showed that 2 in 5 Malaysians live in terraces, while 3 in 10 prefer condos (the second most popular property type on the list). This is an ongoing trend that is expected to continue in 2021. 

 

Should You Buy or Sell Property in 2021?

Overall, those who have sound financial footing and are confident about the future security of income will find themselves spoilt for choice in 2021. This ensues as the market will be highly competitive given the industry will have a surplus of offerings and developers will be aggressively vying for buyer attention.

 

Conclusion

Overall, the economy is expected to improve in 2021 and the property market will follow suit, but the recovery is expected to be gradual and bumpy as we acclimatise to a post-COVID reality.

The situation is likely to improve significantly in the second half of 2021, especially with the promise of a vaccine on the horizon, which will likely have a pronounced impact on consumer sentiment and buying behaviour.

 

For more in-depth analysis on the above, read the full Malaysia Property Market Outlook 2021:

 

Or, read past years' Property Market Outlook Reports:

Malaysia Property Market Outlook 2020

Malaysia Property Market Outlook 2020

ArticleDecember 2019

Malaysia Property Market Outlook 2019

Malaysia Property Market Outlook 2019

ArticleDecember 2018

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