The reinstatement of movement control order (MCO 2.0) and the surging number of Covid-19 daily new cases might have dampened the market sentiment, but the industry leaders do not foresee the property prices continuing to move downwards as current price has bottomed.
Real Estate and Housing Developers Association Malaysia (Rehda) Malaysia president Datuk Soam Heng Choon said the current property price has “hit the rock bottom”.
“The selling price now is the result of the input cost made of the spiking building material price and additional cost incurred due to the pandemic. All developers want a quick sale so that they can pay the contractors and so on to move the business,” he said.
Nevertheless, he also highlighted that developers have gone back to the drawing board as far as launch projects and pricing are concerned as they want to minimize any losses or additional holding cost at this point in time.
“With the MM2H program on hold and MCO reinstated, the developers have no other choice but to price the new projects at a very competitive price to survive the pandemic,” he noted.
Soam was speaking during the live EdgeProp.my virtual fireside chat entitled “Impact of MCO 2.0 on the Malaysian Property Sector” on Facebook today.
Also taking part in the session were Malaysian Institute of Architects (PAM) president Datuk Ezumi Harzani Ismail and Master Builders Association Malaysia (MBAM) deputy president Oliver Wee Hiang Chyn. The almost two-hour session was moderated by EdgeProp.my editor-in-chief and managing director Au Foong Yee.
Ezumi concurred that current property prices are affordable as the pandemic has already adjusted the market.
“Whatever that is overpriced will not work anymore. The pandemic has adjusted the market and what we have now in the market is affordable and matches the income level of the local buyers,” he shared.
Meanwhile, Wee stressed that the property price may not reduce to the level which the market wishes for.
He explained that the indirect construction input cost has increased, such as temporary shut down of construction sites, lack of skilled workers and higher standard of worker’s living and working facilities.
“The selling price is a reflection of the additional construction cost due to the pandemic,” Wee said.
As for secondary market properties, Soam noted that it is not a surprise that the traditional property hotspots remain popular even during an economic downturn.
Land scarcity is one of the reasons that supports the price and popularity -- for instance, demand for landed residential properties near the Mid Valley area will remain intact as there will not be any suitable land left for development, he explained.
“The existing landed house prices will be holding up firmly as everyone knows it is a good location and you will never go wrong buying there, so don’t expect it will be cheap during a downturn.
“If there is a sudden price drop in a property hotspot, it will mean that something is wrong with the country’s economy, which we don’t want to see happen,” Soam noted.