Mustard Tree Communications, Photo Credit to Property Guru
clock 21-08-2019
hit 1,076
Minimal Increase in Property Prices Despite Glut in Housing

While the PropertyGuru Market Index declined on a year-on-year basis, the short-term trend showed a 0.8% increase from 85.4 in the first quarter to 86.2 in Q2 2019.  

“Improved purchasing sentiment was due to initiatives such as the Home Ownership Campaign (HOC), stamp duty exemptions and Bank Negara Malaysia’s downward revision of its Overnight Policy Rate (OPR) to 3%.

“These factors also contributed to upward ticks in asking prices for Kuala Lumpur, Penang and Selangor. However, they were not enough to overcome downward pressures in Johor, including a proposed ban on property sales to foreigners for selected projects in Q3 2018,” said Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.

This comes despite a growing overhang in Malaysia of 53,078 units as of Q1 2019 including 32,936 residential units worth RM19.9 billion.

“The key economic drivers of the market, such as supply and demand, do not appear to have achieved a clear-cut equilibrium. There are still gaps which are obvious and need to be plugged before a more definitive direction of the market can be achieved,” said Prem Kumar, Executive Director, Jones Lang Wootton.

“Property developers have taken heed, especially in terms of the profile of market demand, and this recognition of the change in market dynamics will ultimately be the main thrust towards effective stabilisation of the real estate residential market,” he further added.

Metropolitan markets in review
KL & Selangor in Focus 


Source: PropertyGuru Analytics

The Kuala Lumpur (KL) market index witnessed a 0.8% quarter-on-quarter increase in asking prices in Q2 2019. However, from the long-term perspective, there was a stable downtrend.

The wider downturn is attributed to the ongoing mismatch between property supply and demand, with affordable properties in demand but luxury projects being launched and in the pipeline. In general, home seekers are looking for properties below RM500,000 in Klang Valley.


Source: PropertyGuru Analytics

Sentiment is more positive moving out from the city centre, as Q2 2019 marked Selangor’s third consecutive quarter in which asking prices have risen. 

“A year-on-year increase in supply from Q2 2018 to Q2 2019 of 42% was seen this term, reflecting that sellers are more confident in the market as demand picks up from previous terms,” said Fernandez. 

Penang market resilient since Q4 2018 


Source: PropertyGuru Analytics

Asking prices have been more volatile in Penang, with its index showing a steady decline from Q1 2016 to Q4 2017. 

However, the Penang market remained resilient since Q4 2018, as it grew 0.2% from 92.8 in Q1 2019 to 93.0 in the second quarter. Oversupply is less of a concern than in metropolitan areas further south, with a 28% increase in supply registered during the term.

“The appetite for affordable-ranged properties continues, with units below RM250,000 continuously in demand. The state government is increasing its efforts to meet these calls,” said Fernandez.

Johor market goes against the grain 


Source: PropertyGuru Analytics

Meanwhile, residential asking prices in Johor went against the grain. It was the only state with an upward growth trajectory since 2015, ending with a 0.5% quarter-on-quarter downturn in Q2 2019. 

Its long-term expansion can be attributed to consistent and heavy investment in the Iskandar Malaysia economic corridor, which is reflected in the state’s 118% increase in supply volume in the second quarter.

“This indicates that Johor properties are experiencing good take-up rates and prices are beginning to readjust. Year-on-year asking prices dropped 3%, reflecting that the market is likely to see continued self-correction,” said Fernandez.

Home financing in focus
More needs to be done for B40 households

Residential properties in Kuala Lumpur, Penang, Selangor and Johor accounted for 75% of all newly-applied housing loans.

“There is healthy demand for affordable homes, though home financing remains a challenge for many Malaysians, which is where PropertyGuru is relevant when it comes to aiding transparency in property financing through our Home Loan Pre-Approval solution,” added Fernandez. 

Jones Lang Wootton’s Prem Kumar further added that “B40 households continue to face challenges due to the continuing severe mismatch between property price levels and income levels. 

“It is imperative that the government, together with financial institutions, formulate a specific financing structure which goes far beyond existing schemes such as the rent-to-own programme.

“A comprehensive platform will have to be formulated which addresses forms of ownership, access to funding, availability of specific product types, stakeholder participation, government grants, and more. 

“A well-structured platform which takes into consideration medium to long-term property ownership sustainability aspects would be essential in mitigating the crux of the problem, whereby B40 households in the current environment are left entirely on their own and overwhelmed by complexities related to property purchases, especially with respect to securing funding within the existing structure of the real estate market.”

footer tagline