Buyers continue to resist higher prices, while sellers experience difficulties to sell, given the bleak economic outlook 

by HAZATUL SYIMA HARON / pic TMR

PROPERTY demand and supply in the country eased at the beginning of the year in tandem with an overcast economic outlook. 

According to the PropertyGuru Malaysia Property Market Report (MPMR) for the second quarter of 2023 (2Q23), there is a downward trend in its Sale Demand Index as property enquiries decreased by 5.6% quarter-on-quarter (QoQ). Based on the insights from DataSense, PropertyGuru’s market data and analytics platform, its Sale Supply Index also saw a slight decrease of 0.6% as property owners choosing to wait-and-see on their investments. 

PropertyGuru said while inflation is projected to moderate in the near term, global economic uncertainties have impacted Malaysian buyers’ interest in big-ticket purchases. 

Its Malaysia country manager (PropertyGuru.com.my and iProperty.com.my) Sheldon Fernandez said it will be difficult to see an uptick in property demand with Bank Negara Malaysia’s (BNM) decision to raise the Overnight Policy Rate by 25 basis points to 3%. 

“Potential homebuyers are likely to delay their purchasing plans because of the higher borrowing costs and rising cost of living. Currently, it is still too early to gauge how much impact this will have on the market.” 

Asking Price Keeps Rising 

According to the MPMR’s Sale Price Index, the asking prices of properties listed on propertyguru.com.my increased by 1.6% QoQ in 1Q23. 

The report said sellers are unlikely to lower prices due to the uncertain economic climate. The global increase in construction costs and recent labour shortages have seen developers hiking their prices to cover the higher costs. 

According to PropertyGuru, Malaysia may see a more attractive property market as economic activities accelerate in the second half of 2023 (2H23) despite an expected lower economic growth this year. 

However, buyers are aware of the external pressures caused by global inflation and remain cautious with their purchasing decisions, especially with the current higher borrowing costs. 

“If property prices continue to peak with demand lagging, a global recession or economic shock could lead to a price correction. If it happens, property prices adjust accordingly to reflect the slower demand,” said the property marketplace. 

Trends in Rental Market 

Fernandez said a decrease in rental demand could reflect that Malaysians are becoming even more cautious, perhaps opting to stay with family members and commute to the city to work instead of renting their own place. 

“Again, the wait-and-see approach continues, but it may be further exacerbated by the uncertainties ahead.” 

According to the report, the indexes in the rental market mirrored the trends in the property sale market, tracking a decrease in the Rental Demand Index by 6.3%. This is likely due to the substantial increase in rental prices, with the Rental Price Index rising by 4.7% QoQ. 

PropertyGuru opined that developers and landlords should consider repurposing their unsold properties into co-living spaces, which offers more affordable accommodations by sharing costs and common areas with other residents without completely forgoing privacy. 

This is due to an increase in demand for affordable housing near job centres. More individuals are migrating towards these urban areas for convenience, but the rising prices may force them to forgo ideal living conditions. 

“We are seeing cumulative issues of housing affordability, higher cost of investment, mismatch of demand and supply, and ‘sick’ housing projects. These issues have been persistent in the local market, and unfortunately remain unsolved today. 

“While we do see the government taking the first steps to address these issues, developers must also play their part in assessing what homebuyers need — because that’s changed overtime,” Fernandez added. 

Johor Takes the Spotlight 

According to the report, Johor takes the crown for the most-viewed residential properties in 1Q23. The Southern state boasts the top four most viewed condominium projects in the country and had four other projects front-running in the landed properties category. 

Leisure Farm maintains its top position as the most viewed residential landed project. In the rental market, R&F Princess Cove is popular with those looking to rent, given its strategic location near the Johor Causeway. 

The report said Johor’s development surge is anticipated to persist, fuelled by last year’s RM51.1 billion investment in data centres. The prospect of new job opportunities may entice more Malaysians to relocate to the peninsula’s southern region. 

“Overall in Malaysia, the rising prices driven by global uncertainties will continue to contribute to the current housing affordability issue. As property ownership costs are expected to increase with the OPR hikes, we foresee property buyers and sellers alike will continue to navigate a challenging and unpredictable property market. 

“However, we are cautiously optimistic that the economy will show improvement in 2H23, and we will continue to look out for more positive signs of growth in the residential property market,” Fernandez concluded. 

---

• This article first appeared in The Malaysian Reserve weekly print edition