More homeowners are selling property, supply expected to grow

THE latest PropertyGuru Malaysia Property Market Index (MPMI) report revealed that the overall property supply in the market spiked by 34.53% year-on-year (yoy) and 11.94% quarter-on-quarter (qoq) in the second quarter of 2021.

The surge in property supply in the country in 2Q 2021 is likely driven by an increase of homes being put up for sale in the secondary market under the current economic climate, said PropertyGuru in a statement today.

This upward trend in property supply is observed across four key regions covered by the MPMI, namely Kuala Lumpur, Selangor, Penang and Johor, which saw a yoy increase of 16.91%, 48.95%, 40.32%, and 17.47% respectively.

According to PropertyGuru Malaysia country manager Sheldon Fernandez, the pandemic has caused many Malaysians to lose income whether it’s due to 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.

“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,” he noted.

Meanwhile, the prolonged COVID-19 situation has significantly impacted the property market, as reflected in the asking prices of primary and secondary property markets tracked by the MPMI.

The PropertyGuru Malaysia Property Asking Price Index has been on a declining trend since Q2 2020 with a yoy drop of 2.16%, coinciding with the onset of COVID-19 cases and the implementation of movement control order (MCO) restrictions.

A point of consolidation, however, is that house prices may have already plateaued at its lowest point, given that existing building costs allow very little room for further drastic dips.

Illustrating this, the MPMI found that the price index saw no quarterly change between 1Q 2021 and 2Q 2021, holding steady at 87.86 points.

In three of the four key markets covered by the MPMI, positive growth was observed for asking prices in the second quarter of the year, indicating some form of price stabilisation for Kuala Lumpur, Selangor and Penang.

Asking prices moved upwards by 1.56% qoq in KL, 1.18% qoq in Selangor, and 0.95% qoq in Penang. Johor was the only state that registered negative growth, dipping slightly by 0.15% qoq in Q2 2021.

“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.

“Looking ahead, any significant signs of recovery to the property sector can only be expected once the nation is better positioned to achieve herd immunity with the ramp-up of COVID-19 vaccination, resulting in a more liberal economic environment,” said Fernandez. – July 30, 2021

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