Is The Real Estate Market Finally On The Upswing? Is It The Right Time To Buy Or Sell?

The year is coming to a close and with that it calls for a time of reflection and also renewed resolutions for the coming year. In the midst of the festive feasting and holidays, including the much-needed year-end bonuses (yes!), one particular question springs to mind for many prospective home buyers and owners and that is – is this the right time for me to buy or sell property.

That’s primarily because the New Year brings a new perspective. Plus, coupled with incentives, offers and also elements like the Budget, these factors play a part in swaying decisions pertaining to the purchase and liquidating of real estate assets. But as it is such a huge and long term investment, one should always make a decision on real estate based on facts and most importantly data.

As we’ve covered in our previous articles, proper market research and leg work goes a long way in maximising your real estate experience. And based on the information and market outlook for the coming year, this is what we can more or less surmise.

What The Data Says…

According to the latest Malaysian House Price Index (MHPI), house prices in the country saw a 1.2% decline in the second quarter of 2022. Based on data from National Property Information Centre (NAPIC), the home prices in the local market averaged around RM439,000 in Q2 2022 versus RM444,000 in Q1 2022.

In terms of transactions, the local market has recorded over 188,000 in the first half of 2022 alone. Overhang units also saw a decline of 7.5% in volume, which bodes well for the local property market. Based on these insights alone, it seems that the property segment should continue to be somewhat stable as the world continues into the endemic phase.

Although we may not see the volatility during pandemic levels, there is a growing consensus that the country’s real estate outlook will be subdued in 2023. A recent survey by Real Estate and Housing Developers’ Association Malaysia (REHDA) supports this find as only 24% of respondents, mostly developers, remained optimistic about the property market next year.

This is due to the current uncertainty revolving around the economic outlook for the year ahead, which will be affected by inflationary pressures resulting in rising costs for materials. Another deterrent is Bank Negara Malaysia’s (BNM) current overnight policy rate (OPR), which has risen to 2.75%.  This, coupled with the prospect of a recession and inflation in the coming year, as well as a weakening ringgit, have forced many buyers to adopt a wait and see approach when it comes to buying properties.

So Is It A Good Time To Buy Or Sell?

If you’re wondering if it’s a good time to invest in real estate in the coming year, well the first thing you have to ask yourself is if you can afford it. After all, a mortgage is for the long term and buying a real estate asset is always a sizable investment. The last thing you need is to saddle yourself with a monthly commitment that adds immense pressure on your cost of living.

For those who are liquid enough to purchase properties, perhaps now is a good time to peruse the market to uncover some enticing deals. With the market expected to be subdued for at least a couple of years, it could see some prices fluctuate, perhaps to even more favourable levels.

That said, although this creates a good opportunity to snag a bargain, some prominent areas such as Bangsar, Damansara Heights, Mont Kiara and Kenny Hills continue to hold appeal, as they are highly sought after addresses. A good place to source properties going for a bargain is within the overhang segment and developing areas where there is an oversupply. Also keep an eye on unsold new properties or developer units that come with additional discounts, waivers and freebies.

For those looking to sell their properties in the coming months, there is a significant chance that you will likely not be able to yield the same valuation recorded during pre-pandemic levels. However there are some notable exceptions to the rule, especially if your property is located in a coveted area and address.

Like the aforementioned areas of Bangsar, Damansara Heights and Kenny Hills, established areas such as Petaling Jaya, Damansara and Tanjung Bungah in Penang are continuing to hold steady with continued appeal amongst home seekers. As such prices of properties in these areas remain firm with marginal increases.

Don’t discount the stimulus plans being set forth to help revive the property sector. Although the Budget 2023 incentives are currently being put on hold due to the election, some of the measures presented could provide a positive impact on Malaysian real estate.

The stamp duty exemption of 75% for properties priced between RM500,000 to RM1 million (until 23 December 2023) should generate some interest in landed homes as well as luxury condos. The 100% stamp duty for properties priced at RM500,000 and below for first time buyers will also aid middle-income earners looking to put down for their first property.

These incentives could play a significant part in raising the market sentiment towards the housing sector. For buyers and sellers, this could create an avenue for renewed interest in real estate properties – both new and the subsale segments – which could pave the way for the Malaysian property market towards its expected recovery in the not too distant future.

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