The pandemic-related freeze on economic activity during the April to June period left many industries and businesses at standstill. However, the property market was not badly affected as property seekers continued to express interest via online platforms giving more opportunity and confidence to grow.
The home journey was further enticed with the many government-initiatives like the reintroduction of the Home Ownership Campaign (HOC), which will stay in effect until May 31, 2021, exemption on Real Property Gains Tax (limited to 3 residential units per Malaysian citizen) and the 70% home loan margin cap on the third residential property was removed and a series of Overnight Policy Rate cuts by Bank Negara Malaysia that provided a greater opportunity to jump into the market now.
To support this stance, findings from the Malaysia Property Market Index (MPMI), a study that tracks the asking prices of properties in the primary and secondary markets on a quarterly basis saw that overall asking prices held relatively steady in Q2 2020, performing better than anticipated, with a quarterly gain of 0.38% on the index.
On a state level, asking prices increased in Selangor but dropped marginally in three of the four markets namely Kuala Lumpur, Penang and Johor.
“We’ve seen Selangor’s price index grow from 93.20 points in Q1 2020 to 94.18 in the second quarter. This, coupled with Kuala Lumpur’s 1.28% drop from 96.62 points to 95.38 points over the same period, points towards a dispersion of interest from urban areas to city outskirts and satellite townships,” says Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.
Penang and Johor saw prices decline slightly by 0.17% and 0.61% respectively and its largely sideways movement in major markets came despite projections of property price drops due to weak sentiment and industry restrictions following the COVID-19 outbreak.
“Price resilience here mirrors situations in regional markets, with sellers hesitating at price reductions, particularly in the auction space. However, this came with corresponding impacts on transactions, as buyers opted out of purchases in anticipation of future price drops,” says Fernandez.
“Such price drops are strongly indicated by factors such as rising unemployment and a projected contraction in GDP, both of which have been linked to property price movements in the past.
With the 1997/8 recession and Nipah virus outbreak as a worst-case scenario, we project an upward limit of 10% on price impacts – with discounts under the reintroduced HOC driving immediate change here.”
Selangor Property Market Continues To Gain Interest From Buyers
Properties in Selangor have always been a popular choice among property seekers and continues to gain interest as asking prices in the country’s most economically vibrant state continued to tick upwards in the second quarter of the year.
According to the MPMI, Selangor asking prices increased by 1.05% in Q2 2020, rising from 93.20 points in Q1 to 94.18 points in the last quarter.
Interest in properties during the Movement Control Order (MCO) period was further encouraged as developers aggressively turned to digital marketing to move their projects located in Selangor itself.
Clearly seen by Gamuda Land, Mah Sing, EcoWorld, Trinity Group and Sime Darby to name a few, these developers were active and leading the way in offering incentives such as rebates, discounts, cashbacks, furnishing packages, easy purchasing schemes, zero down payment and interest deferment plans, which has contributed to elevated buyer interest.
One interesting fact to note is that while property interest during the MCO played a part in keeping the asking prices afloat, Selangor was also the most affected by COVID-19, with the highest number of infections as well as key urban areas declared as “red zones”.
And that did not stop the buying appetite it the state as it remained uptrend and was supported by year-on-year (YoY) supply growth of 5.12%, making this location a sustained place to buy.
Another finding to note was many projects were actively being promoted on online platforms during this period that drove interest there despite COVID-19 impacts in the state.
Online Platforms Became Significant During MCO
Uptake of online platforms have increased significantly during the MCO period, with 75% of Malaysians citing property portals as a preferred starting point for their homeownership journeys, according to the PropertyGuru Malaysia Consumer Sentiment Study H2 2020.
“This trend reflects a larger shift to digital tools in the wake of the COVID-19 pandemic. In its role as Malaysia’s largest property site with the most home choices, PropertyGuru is catering for this demand with over 450,000 listings and an emphasis on virtual tours and other virtual initiatives moving forward,” says Fernandez.
More users are turning to social media as well, up from 64% in H1 2020 to 66% in H2 2020. Developer websites were the third-most-popular sources of property information, rising from 57% to 62% over the same period.
To keep afloat and relevant, developers leveraged on this trend through a range of digital initiatives and incentives to lure buyers to continue the homeownership journey across the country.
To find out how the other states have performed, download the full report here for free!
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