After a two-year slumber due to the COVID-19 pandemic, the economy is slowly picking up again. With borders across the world loosening and Vaccinated-Travel-Lanes being opened between countries, we are slowly but surely regaining some sense of normalcy.  

One sector that has been assuredly affected by the pandemic is the real estate market. Due to restricted movement controls, the Malaysian property market was undoubtedly impacted. Although it wasn’t dormant, the sector did not thrive as well compared to pre-pandemic levels. 

According to market data by the Valuation & Property Services Department of the Ministry of Finance (JPPH) and Bank Negara Malaysia (BNM), the Malaysian property market experienced significant drops in both value and property transactions in 2020. 

A total of 295,968 transactions were recorded in 2020, which is down by roughly 10% compared to 2019. The transactions amounted to RM119.08 billion – down by almost 16% compared to the same period. However, last year, JPPH revealed that the volume of property transactions in the first three quarters of 2021 registered at 201,068 transactions, with a total value of amounting to RM98 billion – a 14% year-on-year increase. 

In line with this, data from Bank Negara also shows Q3 of 2021 witnessed a 32% increase in approved value of residential loans compared to the same period the year before. Although the signs are encouraging, the Malaysian real estate market is still far away from getting back to levels recorded in 2019.

However, as the sector starts to recover, buyers, investors and owners will have to contend with an evolving landscape. This ultimately could affect how they purchase and sell their properties in the year ahead. 

An Uncertain 2022 Outlook 

Most industry experts forecast that the 2022 property market will be tough and turbulent owing to a number of factors. Incentives and offers brought upon by Home Ownership Campaign (HOC) have concluded at the end of 2021. With no indication for the program to be extended, this will effectively hamper sales of residentials in early 2022. 

The pandemic also saw Bank Negara lower its Overnight Policy Rate (OPR) to a record low of 1.75%, which brought down the cost of home financing. Nevertheless, with the recovering economy, economists are predicting that interest rates will rise later this year owing to market recovery, which will translate into higher monthly instalments for future homebuyers.  

There’s also the ongoing issue of oversupply or overhang units in the property market. Based on the most recent data from NAPIC (National Property Information Centre), unsold properties remain high in 2021. According to the data, there are approximately 171,000 overhang units in the market as of Q3 2021, which is an all-time high. The majority of the overhang units consists of high-rise condos and apartments.  

And then there are also the outside factors in play such as the new rules for MM2H (Malaysia My Second Home), which may reduce foreign interest in local properties. There is also a wait and see approach regarding the political situation in the country amid talks of the 15^th General Election being held later this year. This could also result in many buyers to adopt a holding pattern on property investment until the political situation is firmly resolved. 

Leveraging Opportunities

As the saying goes every cloud has a silver lining and this holds true for property investment. For buyers, 2022 could be conducive time for prospective homeowners.  For starters, overhang units are providing enticing below market rate deals. 

Data from NAPIC states that a total of 30,290 units of completed homes valued at RM19.75 billion were reported unsold in Q3 of last year. Johor led with the highest number with 24% of the total, followed by Kuala Lumpur and Selangor at 20% and 18% respectively. In terms of property type, 73% were high-rises. Based on this data and applying the required parameters will surely reveal some prospective units that are up for sale. 

For buyers of new homes, the current climate will offer some potential advantages. With developers eager to dispose of their completed or under construction units, this could result in more advantageous offers. This includes discounts, incentives such as waivers of certain fees such as Stamp Duties along with furnishing, providing a better bang for the buck.

First Home Buyers (FHBs) will also stand to enjoy up to 110% financing for residential property below RM500,000 via Skim Rumah Pertamaku. Taking advantage of the current interest rates, this could result in securing a fixed-rate mortgage that is easier on the wallet for the future. 

It’s also important to factor in a number of other matters that will play into sub-sale property market for 2022. For instance, the ending of the second loan moratorium in January may result in some anxious owners looking to off let their units this year. Also fuelling more sub-sale units to go on the market is the abolishment of the Real Estate Property Gains Tax (RPGT) from year six onwards, which was announced during Budget 2022. 

If you fall into this category and are looking to relinquish your property to take advantage of the RPGT, then it will pay to utilise the necessary tools and information at your disposal. For starters, peruse the current market rate to ensure you’re not overpricing or undervaluing your unit.

List the units effectively and properly, so that you are able to capture the attention of the right audience or market. Property Market Places like Mudah Property will allow owners and their agents to reach out to potential buyers both in state as well as out of state and also overseas buyers, who are looking to capitalise on a good real estate investment for their future. 

Regardless of being a buyer or seller, the 2022 real estate market could result in finding a good buy or a good return of investment for the coming year. Find useful insights, tools and listings at Mudah Property to help you on your real estate journey as you search for that dream deal in the Malaysian property market.