Malaysia Property Prices May Have Hit Rock-Bottom, Says Economist

June 10, 2021

Malaysia Property Prices May Have Hit Rock-Bottom, Says Economist

With the property industry yet to experience a significant recovery since the first wave of COVID-19 cases, property prices in Malaysia may have already reached rock-bottom due to the multiple Movement Control Orders (MCOs) implemented by the government.

Centre for Market Education fellow and Bait Al Amanah economist Fariq Sazuki said property prices can no longer be lowered by developers during MCO 3.0 since the prices also reflect the rising costs of building materials and labour, reported The Malaysian Reserve (TMR).

The hike in costs is attributed to the pandemic, disruptions in the construction supply chain and time extension.

“In other words, the current property prices might have adjusted to the pandemic, where developers are more well-prepared of the impacts of the past MCOs,” he told TMR in a phone interview.

“Besides that, MCO 3.0 is no stricter than the first MCO, meaning that the additional impacts of MCO 3.0 on the supply side are quite minimal except for the rising costs.”

Click here to check out insights on the Malaysian property market.

Fariq, however, still sees uncertainty surrounding MCO 3.0 from the demand side.

He noted that while the property market is believed to have recovered due to the low Overnight Policy Rate of 1.75%, the change in demand for properties could be ambiguous but skewed towards the rich.

Specifically, low-income earners are expected to use the extra savings from paying loans on essential household expenditures, while rich persons would likely take advantage of the low interest rates to acquire more properties, pushing up prices.

“However, this situation may only happen at hot spot areas such as Kuala Lumpur, where the demand for properties remains intact even with the pandemic,” said Fariq.

“Properties in other areas such as Iskandar Malaysia may continue to face unfavourable fates for a long time.”

He also underscored the lack of evidence supporting the view that the vaccination process would help in the recovery of Malaysia’s property market, other than offering more secure meetings between potential buyers and developers.

James Wong, Managing Director of VPC Alliance (KL) Sdn Bhd, on the other hand, believes property prices may decline with the enforcement of MCO 3.0.

He expects the number of COVID-19 cases to further increase in the coming months, which could adversely affect the property market.

“With the implementation of MCO 3.0, the economy will suffer further with increasing unemployment, salary cuts and closing down of businesses…This will definitely affect the property market and further decline in transactions and property prices are expected in the coming months,” he told TMR.

The latest PropertyGuru Malaysia Property Market Index showed that overall asking prices for properties in Malaysia declined 0.84% quarter-on-quarter and 1.79% year-on-year during the first quarter of 2021.

Sheldon Fernandez, Country Manager of PropertyGuru Malaysia, attributed the drop in prices to buyers’ apprehension as they take on a wait-and-see stance due to the resurging cases of COVID-19 as well as the enforcement of MCO 2.0.

Given the economic uncertainties brought about by the pandemic, sentiment may remain cautious as the property market could witness fluctuating price trends over the coming months, he said.


Check out these latest project reviews today! Or read our helpful Guides to learn all about the various property buying, selling and renting tips!


You may also like these articles

Property Market Sees Price Correction And More Affordable Housing Launched In H1 2020

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 pr

Continue ReadingDecember 11, 2020

Government Urged To Intervene, Control Construction Material Prices

With prices of construction materials on the rise, industry players have urged the government to “intervene” by controlling prices of such products and penalise suppliers who engage in unethical p

Continue ReadingJanuary 25, 2021

PropertyGuru: Property Market Shows Resilience with Steady Asking Prices

The property market is displaying signs of resilience, with the latest PropertyGuru Malaysia Property Market Index (MPMI) report registering no changes in overall asking prices for the final quarter o

Continue ReadingFebruary 25, 2021

PropertyGuru: Property Market Sees Slight Dip in Asking Prices, Expected to Stabilize with Vaccination Programme and Government Incentives

PropertyGuru, Malaysia’s No. 1 property website, announced that its latest Malaysia Property Market Index (MPMI) report registered a downtrend in overall asking prices by 0.84% QoQ and 1.79% YoY –

Continue ReadingApril 28, 2021

Many Turn To Renting Amid Increasing Property Prices, Stagnant Income: EPU Survey

With the house price growth far outstripping the increase in salary, many Malaysians are forced to remain as renters, according to a survey by the Economic Planning Unit (EPU) recently.The survey show

Continue ReadingMay 5, 2021