By Sharina Ahmad
THE growth in the property market has been largely derailed due to the Covid-19 pandemic. The existing home market had already been suffering from a property overhang of 50,008 residential units worth some RM33.96 bil in the country as at the third quarter of 2019.
The situation has worsened during this pandemic due to the movement control order (MCO) as people might delay their plans to buy properties even as developers pull out of new listings and new contracts and put on hold ongoing projects.
Raine & Horne International Zaki + Partners Sdn Bhd associate director James Tan said that there have been a small number of cancellations since the economy has not been doing well even before the Covid-19.
“Demand for an affordable well-located property in the RM350,000 to RM550,000 range is still relevant. However, some of the homebuyers are unable to get loans due to Bank Negara Malaysia’s stringent lending policy,” he told FocusM.
Tan expects the situation to return to normal once the outbreak is over but is uncertain on how long this will take. “The unemployment rate is shooting up with our gross domestic product (GDP) dropping, plus (there’s) political uncertainty. Malaysians love property but the issue is affordability and mismatch in supply and demand.”
He added that the virus has left a negative impact on the property market. “People are afraid of the virus, especially at construction sites which are staffed mainly by foreigners.”
According to a report, Pavilion Embassy is one of the construction sites that has been placed under targeted enhanced movement control order (TEMCO) after 28 construction workers tested positive for Covid-19.
In Kuala Lumpur, there are 1,200 construction sites occupied by foreign workers.
A builder of affordable homes, Taraf Nusantara Sdn Bhd managing director Datuk Jimmy Doh, said the company has seen some cancellations albeit just a few homes representing single-digit percentages.
The property developer is currently developing Bandar Baru Setia Awan Perdana (BBSAP) in Perak, a five-phase township with 10,500 semi-detached and terrace homes.
“Some of the factors cited by the few purchasers who cancelled are the uncertainty about employment and income,” he told FocusM.
Doh said the decrease in daily Covid-19 cases will help gradually improve consumer confidence as economic activity starts to resume. “Housing is considered essential by most and once consumer confidence returns and sales galleries re-open, we will see the sales stream back on track again.”
However, he opined that investment assets will be affected and put on hold, especially for first home buyers. “Malaysia has a relatively high percentage of young population who are potential first home buyers (14 million of Malaysia’s 32.4 million are aged between 15 and 40, according to the Department of Statistics Malaysia in 2019) and this will be unaffected.”
Township developer LBS Bina Group Bhd managing director Tan Sri Lim Hock San said due to Covid-19, the global economy has slowed and consumers may be tightening spending, the demand for the property could be weakened and the overall market may slow down in the short term. “However, I believe that the mid- to long-term property market is still positive.
“Taking a cue from the SARS outbreak in 2002, the property market in Malaysia saw a strong rebound in mid-2003 towards early 2004. I would expect that once the Covid-19 pandemic subsides, the property market will recover in 2021,” said Lim.
He added that own-stay homebuyers and long-term investors should take this opportunity to buy their choice of property when there are good bargains.
“Property is an important asset which will appreciate in value over time. Historically, buying property in times like this has proven to be a good investment decision.”
Meanwhile, strategic marketing consultancy firm REI Group of Companies CEO Dr Daniele Gambero said property remains as the first basic thing in life needed by every human being.
“Once this pandemic is over or even before that, people will go around and look for properties. But, the issue is do buyers have enough income and savings to buy a property? Will the economic engine restart soon?” he questioned.
Gambero noted that most of the new investors are thinking of dropping their bookings due to the huge crash prediction in the property market in the next few months and would rather wait for the prices to hit bottom.
“However, I think they’ve realised that it might not be happening and they have pulled back from their refund decision.”
Gambero mentioned that one of the factors contributing to the cancellation is a lack of trust in small property developers. “I’ve repeatedly said that the small developers with less experience and cash might find themselves in trouble in the next few months as the public/buyers will opt for more established developers.” – May 6, 2020
