Press Release: PropertyGuru- Property Market Poised To Recover in H2 2021
PropertyGuru: Property Market Poised To Recover in H2 2021
- Favourable interest rate and incentive-rich environment encourages homeownership
- Spillover effect from the continuation and revival of mega infrastructure developments
- Anticipation of effective vaccine could reverse current sluggish consumer sentiment
Kuala Lumpur, 15 December – 2020 has been a challenging year for the Malaysia property market, as the country’s economy has been significantly impacted by the COVID-19 pandemic.
Malaysia’s Gross Domestic Product (GDP), which fell by a record low of 17.1% in the second quarter, declined by 2.7% in the third quarter. Bank Negara Malaysia (BNM), in its statement dated August 2020, has forecasted that GDP for the year to decline within the range of 3.5% and 5.5% in 2020.
The year 2020 also saw a significant decline in property transactions. According to Bank Negara Malaysia (BNM) Financial Stability Review 1H 2020, property transactions posted a decline of at least 25% for both volume and value. Nevertheless, the property market continued to show signs of resilience, as the transaction declines were less-than-anticipated, partly driven by various measures and initiatives from the government.
These measures and initiatives include the reintroduction of the Home Ownership Campaign (HOC), which includes Real Property Gains Tax (RPGT) exemption, stamp duty exemption, and the removal of the 70% margin of financing limit. Additionally, a six-month loan repayment moratorium that began in April has helped keep the lid on default rates.
PropertyGuru Malaysia, the country’s largest property website, in its recent Property Market Outlook 2021 Report opines that Malaysia’s economy will gradually improve next year. The property market is set to benefit from the economic recovery, albeit at a slower pace in the new normal.
“The property market is expected to improve in the second half of 2021, partly driven by an improved economic and public health climate.
“Strong existing demand for homeownership will likely be unlocked and we will see healthy growth in property transactional activity. However, the recovery is expected to be gradual as we acclimatise to a post-COVID reality,” said Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.
He added that the promise of a vaccine being made to the public during the course of the year will bring welcome relief on this front which will further determine buyer behaviour in 2021.
2021: A Buyer’s Market
The current market condition with a historically low-interest rate, property developers’ aggressive promotions, heightened competition among property sellers and incentives under the HOC programme – makes it a favourable timing for homebuyers to look for bargain deals.
However, the prevailing economic climate continues to suggest that caution should be a prime factor in any decision-making process, specifically due to job and income uncertainties.
“Purchasers must not only consider the cost of owning a property but also whether they can afford it while managing other expenses.
“Overall, a buy is advisable for those who are on sound financial footing and are confident about the future security of income. Those in this position will find themselves spoilt for choice in the current buyer’s market,” added Fernandez.
Five Trends that Will Drive the Property Market in 2021
According to the PropertyGuru Malaysia Consumer Sentiment Study, 57% of respondents expressed their intention to own a home by the end of 2021, while 1 in 6 respondents plan to postpone their purchasing plans indefinitely.
“With many Malaysians aspiring to own their own home next year, we have identified 5 key trends that will help facilitate the uptake. They range from incentives to enhance the macroeconomic environment, measures by the government and property developers as well as uptake of digitalisation within the property industry,” said Fernandez.
PropertyGuru has earmarked these key trends as driving forces for the property market. They are:
1. Conducive interest rates to encourage homeownership
The Monetary Policy Committee (MPC) of BNM kept the Overnight Policy Rate (OPR) at 1.75% in its most recent review in November, citing significant improvement in economic activity during Q3 2020.
Lower OPR allows buyers to lock in lower interest rates favourable to current financial standings, especially those finding it difficult to fork out higher monthly loan repayments.
2. Continuation of mega infrastructure developments to create multiplier effects
The Budget 2021, which was tabled at Parliament in November, has seen the Government allocated RM15 billion to revive and ensure the continuity of several mega projects, such as the Mass Rapid Transit Line 3 (MRT3) in Klang Valley, Rapid Transit System from Johor Bahru to Woodlands as well as Pan Borneo Highway across Sabah and Sarawak.
Additionally, the development for Kwasa Damansara, a massive township bordering Kota Damansara and Sungai Buloh with a gross development value of RM50 billion, will create more than 100,000 jobs and have about 10,000 affordable houses.
3. HOC continues to spur buyers’ interest
The reintroduction of the government-initiated campaign has proved to be an effective measure to boost the market, which offers a number of incentives to homebuyers, and is expected to remain in play for much of the first half of 2021.
4. Property Technology On the Rise
One positive outcome of a pandemic-challenged property industry is increased innovation and a greater focus on digital solutions. Key property players have accelerated the efforts to market products and engage with buyers through online initiatives. This bodes well with millennials who are well versed with e-commerce habits and make up a large segment of the house buying market.
PropertyGuru hosted the region’s first largest multi-country virtual property expo which brought together 300 developers over 10 countries on one platform.
Other game-changers include data solutions, whereby easy access to real-time property transaction data would help create greater transparency within the property ecosystem – for buyers, sellers, agents, developers and financiers. PropertyGuru leads the fore with the recent acquisition of MyPropertyData.
5. Affordable housing for the B40 segment
The Budget 2021 revealed that the government will be focussing on affordable housing in the coming year, announcing several measures that will incentivise homeownership among the lower-income (B40) segment of the populace.
This measure will allow private developers to focus more on free-market housing while allowing the government to take the responsibility to provide more cohesive housing for the rakyat.
For the complete PropertyGuru Property Market Outlook 2021, kindly click here.
— End Of Press Release —
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