THE economic downturn last year has affected both new development and subsale residential property sales in Klang Valley, seeing a year-on-year (yoy) drop of 64.9% and 41.1%, respectively, which could be due to delays in new project launches.
In 2020, MyProperty Data found that the property market in Klang Valley recorded the lowest new development purchase in the last five years, with a 90.6% and 38% yoy decrease in the number of transactions made by first-time home buyers and investors, respectively.
On the other hand, the total number of transactions in 2020 for subsale properties was the lowest for first-time home buyers (79.4% yoy decrease), but the highest for investors (9.6% yoy increase), in the same five-year period.
Due to this, aspiring first-time home buyers who have the capital but are indecisive in taking the leap into home ownership should acquire more enticement from developers and the Government alike.
“To help spur the industry and to increase home ownership, there need to be greater incentives offered to first-time home buyers – be it attractive rebates from developers or assistance from the government,” said MyProperty Data managing director Joe Hock Thor.
On the other hand, the pandemic has presented a prime opportunity for investors to capitalise on the discounted prices of properties, the various incentives available, as well as the current low interest rate environment to pick up quality assets for the future.
A golden opportunity
Since properties are often considered as a hedge against inflation, Joe believes that the assets may offer a long-term boon with the eventual market recovery and stabilisation.
Hence, property investors are increasingly turning their attention towards subsale properties as they make up 81.1% of the purchasers of residential properties in the Klang Valley area last year.
According to Joe, the subsale residential property market in Malaysia has seen steady growth in the last few years, which was further accelerated by the effects of the pandemic.
“There is a rise in overall interest in the secondary market as some property owners are selling their assets at lower prices to maintain liquidity, creating opportunities for investors to acquire them below market value,” he said.
“This is reflected in the spike in the average number of subsale listings that were tracked, which grew by 21.3% between 2019 to 2021,” Joe added.
MyProperty Data also found that the economic downturn in 2020 led to a 47.2% drop in total number of residential property transactions in Klang Valley.
However, the impact is largely seen among first-time home buyers, which used to comprise 55.5% of total property purchases in the area in 2019 but has since then dropped to 18.9% in 2020.
Meanwhile, appetite for residential properties in the area remains strong among investors, with a 36.6% yoy increase in investor activity from 2019 to 2020.
The change in trend could potentially be attributed to first-time home buyers being more wary of the current situation, with complications and challenges presented by COVID-19 spurring them to take a wait-and-see approach.
This is further backed by findings in the PropertyGuru’s Consumer Sentiment Study 1H 2021, which found that 58% of Malaysians aged between 22 to 29 – the age of most first-time home buyers – shared that they are deferring their property purchase by one to five years due to the impact of COVID-19 on the economy, employment and income. – June 25, 2021
