Subsale residential market attracts investors


INVESTORS made up the majority of residential property purchases in the Klang Valley in 2020 at 81.1%, according to MyProperty Data Sdn Bhd.

These investors were also found increasingly turning their attention towards subsale properties.

MyProperty MD Joe Hock Thor said the subsale residential property market in Malaysia had seen steady growth in the last few years and the upward trend was further accelerated by the effects of the Covid-19 pandemic.

There is a rise in overall interest in the secondary market as some property owners are selling their assets at lower prices to maintain liquidity, creating opportunities for investors to acquire homes at below market value.

“The Real Property Gains Tax exemption has also driven some investors to cash in their existing assets and make a profit.

“This is reflected in the spike in the average number of subsale listings tracked on, which grew by 21.3% between 2019 and 2021,” Hock stated in a statement yesterday.

MyProperty noted that the economic downturn last year led to a 47.2% drop in the total number of residential property transactions in the Klang Valley.

The impact was largely seen among first-time homebuyers, who comprised 55.5% of total property purchases in the area in 2019, but had since dropped to 18.9% in 2020.

Appetite for residential properties in the Klang Valley remained strong among investors, with a 36.6% year-on-year (YoY) increase in investor activity from 2019 to 2020.

This change in trend could potentially be attributed to first-time homebuyers being more wary of the current Covid-19 situation, spurring them to take a wait-and-see approach as purchasing a home can be a major financial decision for this segment of buyers.

MyProperty added that the economic downturn last year had also affected new development and subsale residential property sales in the Klang Valley, each seeing a YoY drop of 64.9% and 41.1% respectively.

It noted that the steeper decline in new development property transactions could be due to delays in new project launches, as construction progress was affected during the first Movement Control Order.

In 2020, the property market in the Klang Valley recorded the lowest new development purchase in the last five years, with a 90.6% and 38% YoY decrease in the number of transactions made by first-time homebuyers and investors respectively.

The total number of transactions in 2020 for subsale properties was the lowest for first-time homebuyers (-79.4% YoY), but the highest for investors (+9.6% YoY) in the last five-year period.

This change in purchase behaviours is more prominent among landed properties.

Between 2016 and 2019, the landed property transactions from subsale and new development properties were split at a ratio of 70% and 30% respectively. This shifted to 84% and 16% respectively in 2020.

For high-rise property transactions, the split between subsale and new development properties remained consistent at around 80% and 20% respectively across the last five years.

Hock said to increase home ownership, there’s a need to offer greater incentives to first-time homebuyers such as attractive rebates from developers or assistance from the government like the Home Ownership Campaign.

He added that the pandemic presented a prime opportunity for investors to capitalise on the discounted prices of properties, the various incentives available and the current low interest-rate environment to pick up quality assets for the future.