Housing developers believe that it would take six to 24 months before the property market could fully recover from the effects of the COVID-19 pandemic.
According to Real Estate and Housing Developers’ Association Malaysia (REHDA) President Datuk Soam Heng Choon, 83% of the 180 respondents indicated as such when surveyed, reported Malay Mail.
“Six months means by March to April next year, and for 24 months, we will go into 2023 which they anticipated,” he said during the virtual media briefing on the REHDA Property Industry Survey for the first half of 2021 (H1 2021).
The survey showed that 48% of the respondents answered six to 12 months, while 35% indicated 13 to 24 months.
Meanwhile, 13% of respondents believe it would take the property market over 24 months for it to fully recover.
Soam noted an increased optimism among developers for the property outlook for H1 2022.
“In terms of property market and sales performance, 63% said they were optimistic and in terms of residential sector growth, 69% said they were optimistic,” he said as quoted by Malay Mail.
However, developers were pessimistic on the property market’s outlook for the second half of 2021 (Q2 2021), with 70% of the respondents answering as such.
In fact, 64% of the respondents indicated that they will not launch a project in H2 2021, with 40% pointing to the unfavourable market conditions as one of the main reasons.
Soam added that 59% of the respondents shared that the government’s movement control order (MCO) and subsequent extensions have severely affected the progress of their construction projects, while 53% said their sales were severely affected in Q3 2021.
The survey also showed that 72% of the respondents indicated that the overall cost of doing business in Malaysia has increased in H1 2021.
Topping the list of the factors affecting the cash flow of developers is material and labour cost. It is followed by compliance cost as well as financing cost.
“The increase in the price of raw materials is due to two main things, because of global commodities and the effect on it from the pandemic and the demand for materials in the country,” said Soam.
“For example when the lockdown was implemented, brick factories were not allowed to open but the construction of major infrastructures continued, which caused them to draw from the stockpile,” he explained.
“So there has been more demand than supply and these factories need time to run and build up stockpiles which causes prices to go up. On this front we are not too concerned as it will normalise in the next couple of months.”
Nonetheless, Soam did not dismiss the possibility of government intervention in the event material cost issues worsen.
Check out these latest project reviews today! Or read our helpful Guides to learn all about the various property buying, selling and renting tips!