When pandemic COVID-19 hit home ground early this year that resulted in a nationwide Movement Control Order (MCO), an inevitable downfall in economy and businesses was on the rise. But the overall property market stood strong and braced through the first quarter with a marginal increase in asking prices in Malaysia.
The Malaysia Property Market Index Q2 2020 report saw the overall property market index showing a marginal improvement in the first quarter, increasing 0.63% from 88.90 in Q4 2019 to 89.46 in Q1 2020.
The shutdown of commercial activities due to MCO impacted construction, listings and viewing activities in Malaysia saw a substantial drop in the incoming supply of 10.47% over the same period, representing the steepest quarterly decline in three years.
The increase in overall asking prices was improving gradually prior to the outbreak of COVID-19 and continued to tick upwards, clearly suggesting that Malaysian consumers are viewing property as a preferred fallback for preserving wealth in times of crisis.
“As necessary measures to stem the spread of the pandemic were put into effect towards the end of the first quarter of this year, the property market expectedly saw a sharp drop in activity across the board,” says Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.
“However, the moderation of price growth, as well as transaction volumes and values in recent years, may have had a buffering impact on the market. An upswing in asking prices in major metropolitan areas can also be seen in the first quarter, pointing towards a rise in interest in these areas as Malaysia takes a ‘soft-landing’ approach post-MCO.”
The key property market Selangor witnessed the highest rise in asking prices, rising 1.94% from 91.43 in Q4 2019 to 93.20 in Q1 2020, followed by Kuala Lumpur with a 1.81% increase from 94.90 to 96.62 over the same period.
This concurs the strong interest in the central region is in line with increased investor activity for high-rise projects closer to metropolitan areas during crisis years.
This is further reflected in PropertyGuru Malaysia web traffic, with high-rises and condominiums ranging from RM900,000 to RM2 million accounting for the majority of searches on the portal up to March and early April.
Meanwhile, Penang saw asking price downtrends continuing from recent years and has inched its way down steadily without a history of sharp drops. In this quarter, declines were at 0.13% as the index fell from 95.39 in Q4 2019 to 95.27 in Q1 2020, indicating stability in prices over time.
Johor on the other hand, saw the largest decrease across major markets, from 99.59 to 99.00 over the same period. However, as prices are readjusting, this indicates that a steady stream of demand still exists for the Johor market.
Healthy price movements in central areas were accompanied by steep drops in incoming supply, declining in Kuala Lumpur and Selangor by 11.53% and 10.19% respectively. These decreasing patterns were also seen in other major markets to lesser degrees, with supply dropping by 0.55% in Johor and 0.12% in Penang.
While this timeframe coincides with the onset of the COVID-19 outbreak and MCO in March, the full effects of the pandemic is likely to see steeper asking price drops in subsequent quarters.