The PropertyGuru Market Index ("PMI") shows that asking prices of homes in Malaysia continue to drop nationwide as well as the key property epicentres of Kuala Lumpur, Selangor, Johor and Penang. The downward trend is reflected in both quarterly and annual price movements despite improved consumer sentiment of 42 percent and 53 percent of Malaysians wishing to buy a home by the end of 2018.
In the third quarter of 2018 ("Q3 2018"), the PMI showed that asking prices by real estate developers and individual owners nationwide had dipped by 1.8 percent from the preceding quarter. Year-on-year, prices show a 2.5 percent drop.
Notably, amidst oversupply of properties and new market supply, properties in certain market segments and certain locations are coming under increased pressure with sellers continuing to discount prices to secure buyers.
"Others may be opting to sell as rental rates also come under pressure due to the ample choice available in key areas. With more supply, one can drop rental rates but if that is not feasible, the usual option is to sell to unlock the gains," highlighted PropertyGuru Malaysia Country Manager, Sheldon Fernandez.
Additionally, the present downward price trend may not be due to sellers reducing prices, but also in overall value provided to reduce ownership cost.
"Beyond absolute pricing, there are other factors also such as developers throwing in freebies i.e. furnishing and décor, carparks, or even rebates. Cumulatively, these incentives, reduce the overall cost of ownership which will have a knockdown effect on prices," added Fernandez.
Price Trends for KL, Selangor, Johor and Penang
Similar to the national trend, all key property epicentres in Q3 2018, recorded a quarterly decrease. Kuala Lumpur saw the largest drop by 3.2 percent from the previous quarter, followed by Johor at 3.3 percent, Selangor at 1.8 percent and Penang at 1.3 percent. Johor has been on an upward trend experiencing an upward capital appreciation in the market from Q4 2016 till Q2 2018 until a slight Year-on-Year dip of 2.3 percent was recorded in Q3 2018.
On an annual basis, Selangor recorded the highest yearly decrement with 2.4 percent, followed by Johor at 2.3 percent, Penang at 0.7 percent and Kuala Lumpur at 0.5 percent. With the exception of Johor, all regional markets continue to show a discount to their 2015 base prices. Johor continues to maintain an upwards trend-line, but it remains to be seen if the trend will persist going into Q4 2018 and 2019.
While Fernandez cited that 2018 remains largely a buyer's market for property, he also cautioned against thinking that this applies to all properties being sold in all areas. He mentioned that even locations that may presently experience a price drop, may rebound after completion of the MRT2 or the LRT3 rail lines or other infrastructure projects.
"While the sentiments of Malaysians towards the property market have improved considerably, it appears that asking prices have yet to catch up with this improving sentiment. But the market usually corrects itself going forward. For now, the continued price correction is good for the market in the long-term. Moving forward, we will monitor how property prices perform due to the impact of SST exemption on properties. We can all look forward to our next PMI Report release for Q4 2018," added Fernandez.
The PMI Report is derived from PropertyGuru's extensive proprietary data, which includes (but is not limited to) the asking prices of over 250,000 residential property listings on PropertyGuru.com.my. PMI is a comprehensive, quarterly overview of home pricing trends at national level, as well as the key property markets of Kuala Lumpur, Selangor, Johor and Penang. The data is cleaned, aggregated and indexed to provide insights into price movements on a quarterly basis. The index also considers supply volume of properties from both the primary and resale markets.
The full PMI Q3 2018 report is available at: https://www.propertyguru.com.my/marketindex .