With the rise in Covid-19 cases and the reimplementation of the Movement Control Order (MCO), the property market like most sectors is currently set on a long road to recovery. No doubt with the pandemic showing no real signs of slowing, the fates of many industries are inexplicably tied to how fast the health crisis is brought under control.
Granted the roll-out of the vaccination program will surely help speed things along and hopefully allow the country and its people to get back to their normal lives. However, for the time being it goes without saying that some sectors like the property market will still not rebound fully until the later half of the year or in 2022 at best.
What The Experts Are Saying
According to property consultancy firm, Rahim & Co, the current property market is likely to persist on its current trajectory and remain soft for another year. In its Property Market Review 2020/2021 report, the firm revealed that property transaction activities dropped by 204,721 units in the third quarter of 2020, which is equivalent to almost 16% lower than the same time frame in 2019.
A large portion of this is due to issues such as properties priced out of range of buyers’ capabilities and an oversupply. Faced with an uncertain economic outlook, many prospective buyers are currently adopting a “wait and see” approach as well. This along with the restrictions brought upon by the MCO have caused delay in people viewing properties and complementing their transactions.
The Property Market Review 2020/2021 also revealed that the residential sector declined slightly over 14% in volume and 14.8% in value in the first three quarters of 2020. In Henry Butcher Malaysia’s annual report, titled HB Perspective 2021, the asset consultants corroborated the findings.
The overall interest in the residential sector is expected to continue to be challenging until the health crisis is brought under control. The MCO 2.0 has also affected businesses and dampened investors as well as consumer confidence. With borders still closed (at the time of writing), outside investment has also been affected not in terms of just real estate investment but also within short term lease and rentals.
The report did state however that landed residentials continue to be viewed with great interest. But the current overhang of high-rise residences such as condos, and serviced apartments, will continue to challenge this segment.
What Does This Mean For Buyers?
Although the recovery period may take a while for the property market, positive signs are there for the segment. For one, the property segment has begun to see more favourable prices for properties in recent months. In a recent interview with a financial daily, President of REHDA (Real Estate and Housing Developers Association), Datuk Soam Heng Choon opines that the current property price has “hit rock bottom”.
This in turn has forced developers to price their new projects more competitively. According to Rahim & Co there is currently about a million shortage of formal housing in Malaysia. This is largely owed to a mix-match of pricing as well as types of housing across selected areas.
With buyers still cautious, there could be more affordable projects being launched to cater to the market demand. Within Mudah.my itself, there are currently over 8000 listings for new properties below the 500k mark across the country.
This includes completed projects such as I-Santorini in Tanjong Tokong, Penang that is currently listed for RM460k. Likewise, this new project in Setapak, Kuala Lumpur, which is currently being listed for RM300k.
Is Now The Time To Buy?
That is ultimately the golden question many buyers want answered. And the good news is that there are benefits for those who want to capitalise on a property in the current climate. For starters, buyers can also take advantage of the current low interest rates as well as incentives offered during the HOC 2020 (the Home Ownership Campaign), which ends in June.
Prices are also seen to be softening within the sub-sale or secondary market. Regularly searching for a specific piece of real estate in certain neighbourhoods can occasionally reveal a good bargain. Despite of this, do not expect prices to drop considerably much, especially in popular areas.
Properties in hotspots such as Mont Kiara and Old Klang Road continue to hold well. Due to their long-standing popularity and land scarcity, prices for real estate in these areas remain firm. Likewise, the same applies for developments in burgeoning areas and townships such as Shah Alam and Seremban.
The NST recently reported that both these areas recorded positive demand for properties in 2020. This is attributed to more attractive pricing for property as well as choices along with increased connectivity, modern amenities, and facilities. As such demand for real estate in these outskirt areas continue to maintain well. This makes them ideal areas for capital growth and investment.
With signs pointing towards a recovery in 2022, perhaps now is the best time to start scouting for that dream property of yours. As the real estate market is expected to experience an uptrend next year, the capital appreciation may well be placed in your favour.