Despite the cautious optimism on Malaysia’s projected gradual recovery, the property market has remained soft in 2020.
PropertyGuru Malaysia’s latest Property Market Index report shows that asking prices in Kuala Lumpur, Penang, Selangor and Johor are still on the downward trend, since the market is still dealing with the pandemic’s effects in the third quarter of 2020 (Q3 2020).
According to the property site, overall asking property price in Malaysia fell 1.34% in Q3 2020, reversing the 0.38% increase posted in Q2 2020 and the 0.63% increase seen in Q1 2020.
Meanwhile, data from the National Property Information Centre (NAPIC) shows that the property market has recorded a significant drop during the first half of 2020 (H1 2020), in line with the country’s economic performance.
Malaysia saw its gross domestic product shrank by 17.1% in Q2 2020, after contracting 0.7% in Q1 2020. In Q3 2020, the economy saw a rather moderate decline of 2.7%, reported Bernama.
The property market registered 115,476 transactions worth RM46.94 billion in H1 2020, down 27.9% in volume and 31.5% in value from the 160,165 transactions worth RM68.53 billion posted in H1 2019.
NAPIC revealed that transaction volume increased 7.4% to 89,245 in Q3 2020 from 83,085 in Q3 2019.
However, transaction value for Q3 2020 fell by 2.4% to RM33.78 billion from Q3 2019’s RM34.62 billion.
In a bid to attract more first-time homebuyers into the market, the government has reintroduced the Home Ownership Campaign (HOC) under the National Economic Recovery Plan (PENJANA) earlier this year.
Market players said the move will not only make it easy for buyers to acquire a property, it would also help alleviate the oversupply of unsold properties.
In September, Bank Negara Malaysia has kept the overnight policy rate at 1.75% on the back of an improvement in the global economy.
Coupled with strong policy support, the low interest rate environment could prove to be an attraction for house hunters since a low interest rate would mean interest rate savings.
With these, the Real Estate and Housing Developers’ Association Malaysia is cautiously optimistic of the property market’s outlook.
The association hopes to see a better improvement in the market in H1 2021, provided the country does not record any new COVID-19 community transmission.
Meanwhile, the property market witnessed a correction in terms of pricing as more affordable homes were launched in H1 2020.
NAPIC Director Aina Edayu Ahmad said houses priced at RM300,000 and below accounted for 50% of the new launches in H1 2020 at 6,657 units.
Homes priced between RM300,001 and RM500,000 accounted for 28.9% at 4,476 units, while those priced above RM500,000 made up 21.1% at 2,161 units.
In Q3 2020, 6,087 new units were launched within the residential sub-sector, which consists of 3,127 units of landed properties and 2,960 units of high-rise properties.
Units priced below RM300,000 accounted for 50.5% of the new launches in Q3 2020, while homes priced between RM300,001 and RM500,000 made up 24.7%. Units priced above RM500,001 accounted for 24.8%.
“So, we see that the market has done its own correction. In the past years, we have seen more new launches in the higher range but now we are seeing more new launches in the range of RM300,000 and below,” she said at the 13th Malaysian Property Summit in October as quoted by Bernama.
She noted that since homes priced at RM300,000 and below captured most of the market demand, developers should focus on building more affordable homes in this price range.