YEARS before the pandemic, the local property market was already in stagnation. Although there was a marginal increase in 2018, property transaction volume and value had declined between 2015 and 2017.
In 2020, analysts forecasted that there will be not much improvement in the property market. The slowdown is due to affordability issues, slower economic growth and property overhang.
Furthermore, the COVID-19 pandemic has also jeopardised the financial strength and job security of Malaysians, which in turn affects property buying decisions. In addition, a survey by CGS-CIMB Research found that local property buyers have either delayed or cancelled their plans to acquire property following the COVID-19 outbreak.
However, according to a recent Consumer Sentiment Study 1H 2021 findings by PropertyGuru, consumer sentiment improves slightly as Malaysians adapt to the new normal with prospects of a mass vaccination program slated to be rolled out early this year.
Study by the property website also found that Malaysians are still realistic but cautious about property purchase with 42% adopting a wait-and-see approach in anticipation for a better deal in the future.
“Many are expecting that housing prices will go down further as developers have adjusted their pricing strategy to launch more affordable homes. According to Kenanga Research, over 50% of the new launches in 3Q 2020 were priced below RM300,000,” commented PropertyGuru Malaysia’ country manager Sheldon Fernandez.
Sheldon opined that with more affordably-priced properties available in the market, property owners who are desperate to let go of properties have no choice but to reduce the asking price, thus price trends of properties in the secondary market will be fairly linear.
Meanwhile, 52% of the respondents said the difficulties in forking out the down payment for the property purchase remains the main barrier that stops them from applying for a home loan.
The study also highlighted the top five barriers in taking a home loan which include job instability (46%), unfamiliarity with paperwork (33%), poor credit history (27%) and lack of supporting documents (25%).
However, Malaysia is set to roll out its COVID-19 vaccination exercise come Feb 26 with the economy expected to be on the mend after the mass vaccination programme.
If this happens, the property market is poised for a gradual recovery in 2021 driven by a better economic outlook and historically low-interest-rate environment.
This is reflected by Bank Negara Malaysia’s (BNM) latest decision to maintain the overnight policy rate (OPR) at 1.75% as the central bank sees continued recovery in the global economy.
“The property market will also likely be seeing increased sales in 1H 2021 as the Home Ownership Campaign (HOC) ends on May 31,” envisioned Fernandez. – Feb 21, 2021