As herd immunity likely in 1Q22, the property market’s 2H21 outlook will remain bleak on economic and political uncertainties
by HARIZAH KAMEL / pic by TMR FILE
THE residential rental market in Malaysia is expected to improve as more people have opted to rent rather than purchasing homes due to the stagnant property prices and ongoing dreary market outlook.
VPC Alliance (KL) Sdn Bhd MD James Wong said as herd immunity is likely in the first quarter of 2022 (1Q22), the property market’s outlook for the second half of 2021 (2H21) will remain bleak with uncertainties looming in the economic and political scenes.
“Most potential buyers will be adopting a wait and see attitude and the market is not expected to improve until the middle of 2022, provided herd immunity is achieved by then and there is political stability.
“Unable to commit to a purchase, the only option available for those who require accommodation is to rent, hence the residential market will improve. Also, some developers are offering buyers to rent with an option to purchase,” he told The Malaysian Reserve (TMR).
CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen said the rental for residential properties has undergone adjustments since 2015 and many landlords have been charging low rentals in order to attract tenants.
“Generally, rental rates for newly completed projects or properties located nearby new projects will continue to be highly competitive. Rental rates may gradually improve when properties located within the new projects have achieved high occupancy rates.
“With the large number of affordable properties coming into the market, we expect rental will remain at a highly competitive level,” he told TMR.
Areca Capital Sdn Bhd CEO Danny Wong Teck Meng said there are two schools of thought.
Firstly, that the supply glut of residential properties is still hanging thus affecting the rental market; and on the other hand, many working adults now prefer to rent rather than buy properties.
Wong is of the opinion that it highly depends on the location, adding that the rental market is still soft for the time being.
Asiacap Valuers & Property Consultants Sdn Bhd property valuer Kit Au Yong surmised the property market to remain in a soft condition in 2H21 going into 1H22, with possibly slow gradual improvement in 2H22.
“We maintain a cautious view about the property market performance. However, the market is treading carefully in response to the current volatile unprecedented short- to mid-term condition,” he said.
Last year’s pandemic shock immensely hurt Malaysia’s economy with its GDP contracting 5.6%.
This year, the GDP is projected to recover at about 5%-6%.
In April, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said Malaysia’s property market in 2020 experienced a decrease of 9.9% in volume of transactions and 15.8% in value of transactions compared to 2019.
According to Property Market 1Q21 Snapshot, Malaysia recorded 80,694 transactions, a contraction of 11.6% compared to 4Q20.
The government has introduced the Prihatin Rakyat Economic Stimulus Package and the Short-term Economic Recovery Plan, as well as allocations and incentives to help cushion the negative impact on the property market such as the stamp duty exemption.