Property market recovery hinges on pandemic, economic stability

Greater economic stability and improved job security will result in a more conducive environment for individuals to revive homeownership plans

by S BIRRUNTHA / pic by MUHD AMIN NAHARUL

THE reopening of nearly all economic sectors and the successful rollout of Covid-19 vaccinations will be the recipe to revive Malaysia’s property market in 2022, but there are hurdles ahead, according to valuers.

CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen told The Malaysian Reserve while the property market is expected to recover and record better performance in 2022, threats like new Covid-19 variants, inflation-driven high prices of construction materials and political instability may still derail the trajectory.

Chan said there were many reasons that may have dampened property sales last year including high prices, mismatched products and locations, and developers need to address these shortcomings and avoid the same mistakes in 2022.

Reviewing the year 2021, Chan said the performance of the overall property industry last year remained unchanged from 2020.

“Amid the pandemic and economic recession, any increase in the property prices in 2021 was deemed to be good.

“The performance of the property sector could be worse if not for these measures, including providing loan moratorium to borrowers,” he added.

Chan also highlighted that in 2021, positive demand was noted for owner-occupied residential properties and industrial properties.

He said with the opening up of the economic sectors, other property sectors such as retail and hospitality properties have started to show improvement towards the end of 2021.

Recent data by the National Property Information Centre (Napic) showed that the Malaysian property market recorded 139,754 transactions worth RM62.01 billion in the first half of 2021 (1H21), an increase of 21% in volume and 32.1% in value compared to 1H20.

The residential, commercial, industrial, agriculture and development land subsectors recorded year-on-year (YoY) growths of 22.2%, 28.5%, 29.4%, 13.9% and 21.3% respectively.

Similarly, the value of transactions moved in tandem with the residential, commercial, industrial, agriculture and development land sub-sectors, recording YoY growths of 34.7%, 28.4%, 19.8%, 33.1% and 40.6% respectively.

In the primary market, Napic said there were 16,660 units launched, down by 34% against 25,227 units in 1H20, while against H2 of 2020, the new launches were lower by 24.1% with 21,951 units launched. The sales performance for new launches was also better at 24.7%, compared to 12.9% in 1H20.

Napic said the residential overhang demonstrated a moderate growth with a total of 31,112 overhang units worth RM20.09 billion, an increase of 5.2% and 6.2% in volume and value respectively against the preceding half.

However, it noted that the Malaysian House Price Index saw unprecedented negative growth in the second quarter of 2021 (2Q21) after a series of slow price growth since 2018.

Napic also revealed that all states recorded more market activity in the 1H21 review period except for Putrajaya and Pahang.

Juwai IQI’s Bumiputera segment head Muhazrol Muhamad said the firm forecasts recovery in the property market as purchases of both new and secondhand residences climb.

“The rising number of transactions will eventually lead to upward price pressure, especially in the most popular market segments,” he said in a statement yesterday.

PropertyGuru Malaysia country manager Sheldon Fernandez said the market’s improved outlook is reflected in the recent PropertyGuru Malaysia Property Asking Price Index, which found that prices were back on an upward trend in the 3Q21.

Fernandez said positive price indicators captured in 2H21 foresees a more stabilised market in the 1Q22, despite issues surrounding pricing mismatch experienced by the property sector prior to the onset of the pandemic.

PropertyGuru also said another trend that can be observed next year is the improved economic environment for property seekers.

“As businesses begin to reopen at full capacity in accordance with the National Recovery Plan, greater economic stability and improved job security for consumers will be seen in 2022, resulting in a more conducive environment for individuals to revive homeownership plans.

“The recent Budget 2022 announcement also saw the removal of Real Property Gains Tax on homes that are sold on the sixth year onwards, which will help to liberalise the market for investors and second home buyers,” it noted.

PropertyGuru highlighted that terrace houses remain the most sought-after property type in the country, representing the largest volume of properties purchased by both first-home buyers and investors in 1H21.

“The preference has been influenced by recent Covid-19 limitations as younger professionals are seeking more space to balance both lifestyle and work needs.

“This is especially since working from home is now becoming a longterm option.”