More residential supply expected to make its way into the secondary market
By AZALEA AZUAR / TMR FILE PIX
THE overall property supply in Malaysia has increased by 34.53% year-on-year (YoY) in the second quarter of 2021 (2Q21), the highest in two years as owners put up their units to get cash.
PropertyGuru Malaysia country manager Sheldon Fernandez said many Malaysians have been affected by the Covid-19 pandemic where they lose their source of income whether through pay cuts, furloughs or layoffs.
“While the introduction of a six-month moratorium on bank loan repayments will offer some measure of relief to some, those who are cash-strapped may still resort to selling their properties,” he said.
“As such, we may see more residential supply making its way into the secondary market, resulting from those who wish to cash out on their property investments to alleviate current financial burdens.”
The PropertyGuru’s latest Malaysia Property Market Index (MPMI) revealed an 11.94% quarter-to-quarter (QoQ) rise in the same period.
The surge in property supply is mainly supported by increasing homes being put up for sale in the secondary market under the current economic climate.
This upward trend has observed a YoY increase in four key regions which are Kuala Lumpur (KL) (16.91%), Selangor (48.95%), Penang (40.32%) and Johor (17.47%).
The recent implementation of a total lock-down nationwide on June 21 has disrupted the construction and property development sectors’ operations.
As a result, the property supply volume from the primary market may be affected in the coming quarter.
Based on the data from the National Property Information Centre, the number of newly launched residential units fell from 14,865 units in 4Q20 to 5,919 units in 1Q21.
The continuous Covid-19 pandemic has impacted the property market, as reflected in the asking prices of primary and secondary property markets tracked by the MPMI.
Since 2Q21, PropertyGuru Malaysia Property Asking Price Index has continued to drop with a YoY decrease of 2.16%, due to the increasing Covid-19 and the Movement Control Order (MCO) restrictions.
The extended restricted environment, growing economic hardship, and weak consumer sentiment caused sustained downward pressure on prices over the past 4Qs despite certain sectors showing resilience.
PropertyGuru also warned that house prices may have plummeted to their lowest point if existing building costs allow very little room for further drastic dips.
The MPMI does not see any quarterly change for the Price Index between 1Q21 and 2Q21, holding steady at 87.86 points.
Asking prices have also moved upwards QoQ in markets KL (1.56%), Selangor (1.18%) and Penang (0.95%), while Johor dropped slightly by 0.15% QoQ in 2Q21.
“With the uncertainty surrounding the new Delta variant of the virus and the rising infection rates across the country which has led to a fresh wave of lockdowns, we believe that the property sector outlook will remain gloomy for the rest of the year,” said Fernandez.
He also said hopes of recovery in the property sector would only be expected once the nation is in good shape to achieve herd immunity with the ramp-up of Covid-19 vaccination, resulting in a more liberal economic environment.
The government has extended the Home Ownership Campaign (HOC) incentives until Dec 31 this year to support homebuyers looking to purchase property and contribute to the recovery of a negatively impacted property market.
This initiative would help to keep demand alive among financially sound home seekers and investors.
“We expect property asking prices to stabilise at the current low, before gradually moving upwards again in tandem with the progress of the national vaccination programme, and when lower new infection rates are recorded.
“As such, savvy investors and home seekers may see the current climate as an opportune moment to purchase prime property at attractive prices, while taking advantage of low-interest rates and financial incentives offered by developers and the government through the HOC,” he said.