After 16 months of navigating a pandemic-disrupted market, it is clear that the prolonged COVID-19 situation has had a direct impact on property transactions. A turnaround for the current environment of depressed prices can only be expected in tandem with reduced infection rates and removed Movement Control Order (MCO) restrictions.
A point of consolation, however, is that house prices may have already plateaued at its lowest point, given that existing building costs allow very little room for further drastic dips. Illustrating this, the PropertyGuru Malaysia Property Market Index (MPMI) found that the Property Asking Price Index saw no quarterly change between the first quarter of 2021 (Q1 2021) and Q2 2021, holding steady at 87.86 points.
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- What It Means For Those Hoping To Buy/Sell In The Current Market
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Get The Guru View: Key Findings of the PMI Q3 2021
Price Index Overview
The PropertyGuru Malaysia Property Asking Price Index, which tracks the asking prices of primary and secondary property markets on a quarterly basis, stood at 87.86 points in Q2 2021, unchanged from Q1 2021. However, the Price Index registered a YoY drop of 2.16% compared against Q2 2020.
In three of the four key markets covered by the MPMI, positive growth was observed for asking prices in the second quarter of the year, indicating some form of price stabilisation for Kuala Lumpur, Selangor and Penang.
Asking prices moved upwards by 1.56% QoQ in KL, 1.18% QoQ in Selangor, and 0.95% QoQ in Penang. Johor was the only state that registered negative growth, dipping slightly by 0.15% QoQ in Q2 2021.
The onset of COVID-19 cases and the implementation of lockdowns and movement restrictions has affected many industries, and the property sector is no exception.
Looking ahead, any significant signs of recovery can only be expected once COVID-19 vaccinations pick up pace, and the nation is better positioned to achieve herd immunity, resulting in a more liberal economic environment.
As such, the outlook on the property sector is expected to be gloomy for the remainder of the year, as hopes for a recovery have been dampened by a fresh wave of lockdowns and a National Recovery Plan that suggests improvements can only be realistically expected by the end of the year.
Meanwhile, government initiatives such as the HOC extension and six-month moratorium on loan repayments will aid in softening the blow.
Supply Index Overview
Overall, the PropertyGuru Malaysia Property Supply Index recorded a spike of 34.53% YoY in Q2 2021, representing the largest volume growth since Q2 2021. The Supply Index also captured a 11.94% QoQ growth during this period.
From a regional perspective, all four key markets registered positive quarterly and annual growth, with Selangor leading the pack, recording an increase of 16.67% QoQ and 48.95% YoY.
Meanwhile, Kuala Lumpur recorded a 11.62% QoQ and 16.91% YoY growth, Penang moved up by 3.88% QoQ and 40.32% YoY, while Johor saw an increase of 3.34% QoQ and 17.47% YoY.
While the numbers suggest a robust supply growth, it is also important to note that much of the incoming supply is also due to more homeowners putting their properties on the market to generate better cashflow in this harsh economic climate.
In this scenario, an influx of properties for sale could further adversely impact asking prices in the secondary market, going forward.
The recent implementation of a total lockdown in June 2021 under the Full Movement Control Order (FMCO), and the potential of extended restrictions, will likely affect the overall supply in the coming quarter.
Top Performing Regions and District Analysis
Kuala Lumpur: Back in Positive Territory
After witnessing price contractions in the last four consecutive quarters, the median asking price in Kuala Lumpur rebounded with a 1.56% QoQ gain in Q2 2021. This would indicate that asking prices in the capital district could stabilise at this current point, before moving in tandem with the situation over the next few months.
Overall, however, asking prices are down by 2.26% YoY, continuing a downtrend which began in Q4 2017, following an overheated market period.
There were also gains on the supply front, which grew by 11.62% QoQ and 16.91% YoY in Q2 2021. This is significantly higher than the 0.52% QoQ and 2.03% YoY growth captured in the previous quarter.
Areas within the KL district that are currently witnessing increased popularity and rising median asking prices on a QoQ-basis include Jalan Ampang in KL City (+9.55%), Kenny Hills in Bukit Tunku (+6.60%) and Happy Garden in Kuchai Lama (+5.50%).
Selangor: Maintaining Growth Momentum
Selangor continues to put in a strong performance amidst the turbulence of a pandemic-affected market. In Q2 2021, asking prices grew by 1.18% QoQ and 0.98% YoY, which is an improvement from the 0.01% QoQ and 0.85% YoY growth recorded in the last quarter.
The state also recorded the highest supply growth among the four key markets, moving upwards by 16.67% QoQ and 48.95% YoY. In fact, the YoY growth registered in Q2 2021 is the highest growth in supply it has recorded since Q4 2017.
New properties coming into play in the populous Selangor landscape have helped sustain buyer interest over the last few quarters, albeit at a much-reduced transactional rate, and high demand has kept asking prices in positive territory for most of this period.
Areas that have recorded decent median asking price growth in Q2 2021 include USJ Heights in Subang Jaya (+11.39% QoQ), Balakong in Kajang (+11.00% QoQ) and Jenjarom (+8.28% QoQ).
Penang: Picking Up the Pace
Penang’s long run of gradual quarterly price contractions came to an end in Q2 2021, registering an upward tick of 0.95% QoQ in asking prices for the first time since Q4 2018.
From a yearly perspective, however, Penang continued its downward trend by registering a slight dip of 0.77% YoY, which is an improvement from the 1.87% YoY contraction it experienced in Q1 2021.
On the supply side, Penang saw its supply index rise by 3.88% QoQ and 40.32% YoY, of which the yearly growth in supply volume marks the highest growth the state has recorded since Q4 2017. The growth in supply is attributable to the spike in residential overhang in the state.
According to NAPIC, Penang has the second highest volume of residential overhang among the four key regions in the country with 4,477 units in Q1 2021, about 116.39% higher than the 2,069 units recorded in Q4 2020.
Despite this, popular property locales on the island have been attracting buyer interest. Areas that witnessed the most significant upward movement of QoQ asking prices are Paya Terubong (+5.26%) and Batu Uban in Timor Laut (+2.81%), as well as Seri Tanjung Pinang in Georgetown (+4.12%).
Johor: Downward Trend is Easing Off
Johor experienced another quarter of shrinking asking prices in Q2 2021, registering a dip of 0.15% QoQ and 5.22% YoY. However, this is a much lower rate of decline than the one captured in Q1 2021, suggesting the trend of price drops could be gradually reducing pace.
Supply volume continued its upward trajectory from the previous quarter, this time up by 3.34% QoQ and 17.47% YoY, which is the highest yearly growth registered since Q2 2020.
Still plagued with the highest overhang figures of 6,001 units in Q1 2021 in the country, the southern state will have to move forward with well-planned caution in order to manage its sizeable unsold property stock.
Relying heavily on cross-border interest from neighbouring Singapore for most of its upmarket properties, Johor will be looking forward to the removal of travel restrictions and the reopening of borders to improve future prospects.
Areas that have been performing better than most in terms of QoQ asking price movement include Taman Pelangi in Johor Bahru (+4.39%) Taman Nusa Bestari in Iskandar Puteri (+3.52%), and Taman Universiti in JB (+3.14%).
What It Means For Those Hoping To Buy/Sell In The Current Market
Expect asking prices to stabilise at the current low, before gradually moving upwards again in tandem with the progress of the national vaccination programme, as well as when lower new infection rates are recorded. Overall, the market can only be expected to recover once the COVID-19 situation is brought under control and the economy is stabilised. Until then, the outlook for the property market will be one of lingering uncertainty and limited visibility.
For more insights and analysis, read the full PropertyGuru Malaysia Property Market Index Q3 2021 report:
Or, read our previous Property Market Index Reports here: