Malaysia Home Prices Decline 1.2% In Q2 2022, Malaysia’s Overhang Situation Improves In 1H 2022 And, More

19 Sep 2022

13th September – 19th September

Malaysia saw house prices decline in the second quarter of 2022, with the Malaysian House Price Index (MHPI) decreasing 1.2% quarter-on-quarter – the worst quarterly drop since the start of the pandemic.

Meanwhile, the National Property Information Centre (NAPIC) revealed that overhang situation improved during the first half of 2022, dropping 7.5% to 34,092 units from 2H 2021 in terms of volume.


1) Malaysia home prices decline 1.2% in Q2 2022

Malaysia saw house prices decline in the second quarter of 2022, with the Malaysian House Price Index (MHPI) decreasing 1.2% quarter-on-quarter – marking the worst quarterly drop since the start of the pandemic.

National Property Information Centre (NAPIC) data showed that average home prices stood at RM439,084 in Q2 2022 compared to RM444,230 in Q1 2022, reported The Star.

On an annual basis, however, the MHPI increased 0.5% in Q2 2022 as it continued “its low pace growth”. Notably, the index climbed 2.4% year-on-year in Q1 2022.

For the first half of 2022, NAPIC noted that the domestic property market registered a rebound, reflecting the normalisation of economic activities as Malaysia moved to endemicity.

Over 188,000 transactions worth RM84.4 billion were registered in 1H 2022, showing a hike of over 30% in volume and value over the same period in 2021 as all property segments witnessed growth.

“The residential property sector recorded 116,178 transactions worth RM45.62 billion in the review period, increasing by 26.3% in volume and 32.2% in value year-on-year,” said NAPIC.

The commercial property segment, on the other hand, posted 15,169 deals worth RM14.02 billion, or up 45.4% in volume and 28.3% in value over the same period last year.


2) Malaysia’s overhang situation improves in 1H 2022

Overhang situation in Malaysia had improved during the first half of 2022, dropping 7.5% to 34,092 units from 2H 2021 in terms of volume, said the National Property Information Centre (NAPIC) in its semi-annual report.

In terms of value, overhang situation fell 4.6% to RM21.73 billion in 1H 2022, reported New Straits Times.

Notably, overhang for service apartments improved with over 22,000 units worth RM19.32 billion in 1H 2022, down 6.7% in volume from 2H 2021.

Units priced at RM500,000 and above accounted for about 89% of the total overhang.

NAPIC data showed that Johor had the largest overhang in Malaysia with 15,423 units, while Penang came in second with over 5,000 units.

Kuala Lumpur registered 4,279 overhang units and Selangor had 2,248 units.



3) Property sector 1H 2022 performance in line with expectations

The property sector’s performance in the first half of 2022 was in line with the expectations of AmInvestment Bank Research, with two of the seven companies under its coverage performing better than expected.

Four of the other companies performed as expected, while one company underperformed, reported New Straits Times.

The earnings by Sunway and UEM Sunrise were higher than anticipated, while that of Sime Darby Property fell short of expectations due to slower progress billions because of labour shortage.

IOI Properties, S P Setia, Lagenda Properties and Mah Sing all posted core net earnings which were in line with expectations.

Meanwhile, new sales in 1H 2022 dropped 8% year-on-year, mainly due to slower new launches and the expiration of the Home Ownership Campaign (HOC).

 “Nevertheless, we saw new sales began to gather momentum in Q2 2022 with all developers registering stronger sales quarter-on-quarter,” said the research firm.


4) Property market to slow down next year

Businesswoman Calculating Invoice

Malaysia’s property market is expected to be sluggish next year amid the looming recession that is predicted to occur.

Malaysian Institute of Estate Agents (MIEA) Johor Chairman-elect Sr Chia Zi Jin noted that the property market had been quite active following the reopening of borders between Malaysia and Singapore, with several developers adjusting their pricing to make their houses more affordable, reported The Star.

MIEA Johor’s former chairman Liew Toh Sen expects prices to be lowered by 10% to 15%, depending on the properties’ location.

“It will occur at some places like Taman Bukit Indah, Taman Johor Jaya, and Taman Ungku Tun Aminah, where the property market has matured and people actually buy properties due to their amenities and close proximity to the highway to Singapore,” he said.

“But for high-end properties, the market for purchasing will be slow as investors are still adopting the wait-and-see approach,” he added.


5) Prospects bright for Sarawak’s construction sector

Sarawak’s construction sector faces a bright prospect with positive job flows expected, particularly due to its RM100 billion capital injection comes 2030, said MIDF Amanah Investment Bank Bhd (MIDF Research).

MIDF Research reiterated its ‘positive’ recommendation on the construction sector amid the manageable cost headwinds as well as the potential rollout of infrastructure projects, with the upcoming MRT3 tender awards in Q4 2022 driving positive developments, reported Borneo Post.

“We reiterate our view as per our previous reports that we are not overly concerned about the building materials price headwinds being a huge risk to the companies under our coverage as it is still able to mitigate the impacts, on top of margin protection measures such as variation-of-price clauses, which allows part of the additional cost to be passed on to clients,” it said.

The research team expects margins to continue to improve in Q3 2022 onwards “though a dampener may be due to higher labour cost due to a shortage of foreign workers”.

Nonetheless, MIDF Research expects the situation to improve since “construction is among the sectors that are allowed to hire from all 15 permitted source countries”.


6) Selangor offers hawker licence fee, assessment tax exemptions

For the eighth year in a row, the government of Selangor is waiving hawker license fees as well as assessment tax for kampung and low-cost homes for next year.

Ng Sze Han, Chairman of the Local Government and Public Transportation Committee, revealed that the move would reduce the income of the state by RM68.74 million, reported The Star.

However, the state is committed to helping its people cope with the hike in cost of living.

“The country is in the recovery phase (after the) Covid-19 pandemic. However, the people are facing other challenges like inflation, weak ringgit and continuous increase in overnight policy rate that have affected their housing and vehicle loans,” he said.

“As such, the state has decided to reduce the burden on the people (through these exemptions),” he added.


7) 98,000 PPR homes completed as of 5 September

KUALA LUMPUR, MALAYSIA - NOVEMBER 10, 2018 : People's Housing Program or PPR is low cost house project by government.

As of 5 September, a total of 98,000 homes from 156 projects via the People’s Housing Programme (PPR) have been completed at a cost of RM11.6 billion, according to Housing and Local Government Minister Datuk Seri Reezal Merican Naina Merican.

 Another 10,000 units from 26 projects are also being built, with completion expected in 2025, reported Bernama.

“PPR is more for the B40 group, without strong government intervention with high subsidies given, they may never afford homes,” he said.

“Of the RM11.6 billion, at least RM8.8 billion have been subsidised by the government over 20 years to ensure that the people own a home…there are two more PPRs that will have its ground-breaking ceremonies in the near future, namely PPR Bera, Pahang and Kepala Batas in Penang,” shared Reezal Merican.

He revealed that the ministry had also enhanced the PPR housing programme to ensure the success of the ‘Liveable Malaysia’ agenda. This includes upgrading the unit size to 750 sq ft from last June and implementing internet network facilities under the fibre-to-the-home (FTTH) project.


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