Press Release: PropertyGuru- Downward Trend in Asking Prices Leading into 2021
Kuala Lumpur, 17 November 2020 – Malaysia’s economic outlook of the property market is still facing the effects of the COVID-19 pandemic and has impacted Q3 2020. PropertyGuru Malaysia’s Property Market Index (MPMI) report reveals a downward trend in asking prices across all four key markets of Kuala Lumpur, Selangor, Penang and Johor.
Overall property asking prices in Malaysia dropped by 1.34% this quarter; in contrast to the 0.38% increase registered in Q2 and 0.63% increase in the first quarter of 2020. For the first time this year, all key markets saw a fall in prices, indicating that this could be more than a quick dip.
With the latest implementation of the Conditional Movement Control Order (CMCO) after cases increased in a majority of states, PropertyGuru, Malaysia’s leading and largest property site believes that under these new restrictions, current and future commercial activity will be impacted. This leads to a dampening effect on asking prices and the overall property market.
Johor registered the sharpest decline in Q3, where asking prices fell by 2.97%. Kuala Lumpur and Selangor projected weak figures as well with 1.35% and 1.04% contraction respectively.
Penang saw a slight contraction of 0.64% this quarter. With a slight downward dip in asking prices, Penang is a stable haven for those who wish to preserve their assets through property investments.
Silver Lining For Millennials & Upgraders
Properties priced below RM700,000 See Fresh Interest.
According to the National Property Information Centre (NAPIC)’s Property Market Report, H1 2020, the Malaysian House Price Index saw a marginal quarterly decline of 0.7% from the first quarter.
The report indicates that asking prices may continue to take a dip in the months to come. Despite these findings, there is a silver lining as it may unlock pent-up demand for millennials looking for affordable homes.
“With the loss of income and employment brought on by COVID-19, the property market and economy at large needs time to recover. The impact of the COVID-19 outbreak is undeniable, and it will take time to get the economy back on track as many Malaysians struggle with the loss of income and employment.
“Our recent study has shown that up to 81% of the Malaysians we surveyed have the intention to own their own homes by 2021. Properties priced below RM700,000 are seeing interest as many are eager to upgrade or pursue bigger spaces after the discomfort experienced during the lockdown,” said Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.
Supply Of New Properties on the Rise
Selangor Leads with 23.55% Growth followed by Penang, Johor & KL
Based on PropertyGuru’s MPMI report, overall new property supply rebounded and has increased by 19.80% this quarter.
A 10.14% growth was captured on a year-on-year basis, an indication of an upward moving trend. This inclination reflects the easing of the Movement Control Order (MCO) in the first half of the year, with the return of commercial activity.
“Overall, Selangor records the largest increase in supply of new properties by 23.55% this quarter. Market watchers continue to be confident of the state’s long-term prospect, despite it facing the second-largest overhang in the country,” adds Fernandez.
The supply growth follows with Penang (20.30%), Kuala Lumpur (14.39%) and Johor (18.36%) rising quarter to quarter.
Johor Faces Largest Overhang in the Country
Penang Safe Haven For Property Investment
With 6,166 unsold completed units in the market, Johor is the state with the largest number of overhang properties in the country.
The state also registered the sharpest drop in asking prices. Nevertheless, the downward trending price might be favourable for Johor as it may appeal better to the domestic market, which has seen an increase in its online activity on the region’s properties.
“As for Kuala Lumpur, it is going through a challenging period with weakened interest from foreign investors leaving an unsold upmarket stock that is mismatched with local appetites and affordability range,” added Fernandez.
Based on NAPIC’s H1 2020 report, Malaysia’s residential overhang rose 3.3% to 31,661 unsold completed units worth RM20.03 billion during the first half of 2020, compared to the 30,664 units valued at RM18.82 billion over the same period last year.
Opportunities Abound In Light of Challenges
All does not look bleak as there are factors in place to mitigate the risk of financial stability, whereby Bank Negara Malaysia (BNM) is extending 80% of loans for homes that are owner-occupied. The extension substantially reduces the likelihood of borrowers defaulting on their loans.
“Moving forward into 2021 with a climate of lower property prices, expect to see renewed interest and activity among younger buyers who have been actively saving for a property purchase, but have so far been priced out of the market,” said Fernandez.
“Certain hotspots in key interest areas have shown a spike in website traffic which leads us to leverage on the fact that 75% of Malaysians rely on property portals as a preferred starting point for their homeownership journey.
“This trend reflects a broader shift to digital tools in the wake of the COVID-19 pandemic with PropertyGuru launching the region’s first Asia Virtual Property Expo, covering ten countries and featuring up to 300 projects – all in one central location.
“Essentially, stay safe and search for your dream home from the comforts of wherever you are,” he further added.
For more info, please visit: https://avpe.propertyguru.com.my/.
— End Of Press Release —
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