The Malaysian Institute of Estate Agents conducted their annual Real Estate market sentiment survey 2022/2023 end December to understand what happened in 2022 and gauge what is expected in 2023 in the following areas:
- Enquiry level of purchasers in 2022
- Expected enquiry levels from purchaser in 2023
- Enquiry Levels from Tenants in 2022
- Expected Enquiry Levels from Tenants in 2023
- Rental rate adjustments in 2022
- Projected adjustment to rental rates in 2023
- Adjustment to selling price in 2022 compared to 2021
- Projected adjustment to selling price in 2023 and
- Overall property market outlook in 2023
The respondents were from among Real Estate practitioners who are active in the market and importantly who know and understands what is happening on the ground.
The survey was conducted on the side line of the MIEA REN Summit on 17 December 2022. The REN summit is an annual event dedicated for Real Estate Negotiators to gather knowledge and skills in real estate sales & marketing. The attendance was very encouraging as it was attended by 385 Real Estate Agents [REA], Probationary Real Estate Agents [PEA] and Real Estate Negotiators (REN).
The survey revealed some interesting facts to help understand sentiments of sellers, buyers, landlords & tenants throughout Malaysia in 2022 and that of the respondents as to how the market will perform in 2023.
Enquiry Levels from Purchasers in 2022
To understand market movements, especially demand, we asked about the number of enquiries received from purchasers through advertisements and marketing channels in the year 2022 compared to the corresponding period January to November 2021. Enquiries are important as it reflects the interest of the property seekers which will eventually result in a showing of the property and the closing and it is a reflection on the demand. The findings are as follows:
- 41.7% said the enquiries from prospective purchasers increased
- 24.3% said remained constant and
- 33.9% said it decreased
We are not surprised at the increase in enquiries as after the lockdown, the market opened up in the last quarter of 2021 and correspondingly the demand went up as movement became easy, people could look at properties again, more marketing and advertising activities took place, those who waited to invest could view properties, there was also a rise in the disposal of properties to wither the effect of the lockdown in some cases. This trend followed through till December 2022 and we can reconcile with the fact that Q1, Q2 and Q3 National Property Information Centre showed that the volume of transactions in 2022 reached 293,206, an increase of transaction by 46.86% over the same period in 2021.
Expected Enquiry Levels from Purchasers in 2023
Further to a question as to what they foresee in the number of enquiries in 2023, there was a positive outlook from the respondents:
- 49.6 said will increase
- 31.3 said will remain the same and
- 19.1 said will decrease
This can be contributed to the general feeling that the market will perform well in 2023 as there is greater stability in the country vis a vis new government, step taken to develop the economy and trying to place a ‘lid’ on inflation. All these will help build confidence among end users and the investors.
Enquiry Levels from prospective tenants in 2022
The findings are as follows :
- 55.7% said enquiries for rental also increased
- 27% said it remained constant
- 11.3 % said it decreased.
This strong jump in the number of enquiries showed that after MCO there is an increase in rental movements attributed to possibly:
- Existing tenancies moving to other premises
- Movement of interstate for work
- Extensions of tenancies
- The high cost of new homes thus affecting affordability
- Some sold their homes during MCO to realize their investment and thus renting in the meantime
- 6. Young professionals choosing to rent as to the uncertainty of the market
In fact, renting properties is becoming popular these days.
It isn’t conclusive from this survey that there is a general move or preference from purchasing into renting. The data merely points that the number of enquiries in comparison to 2021 has increased.
Expected Enquiry Levels from Tenants in 2023
Further to a question as to what they foresee in the number of enquiries for 2023:
- 63.5% said will increase
- 25.2% said will remain the same and
- 11.1% said will decrease
Again, there is a general feeling that the rental market will perform better. The process is simpler, less upfront payments, shorter term commitment are some of the reasons many are opting to rent instead of buying. Secondly there are many young people coming into the market choosing to rent first.
THE RENTAL RATE MOVEMENT IN 2022
- 33.9% said increased by 10%-20%
- 42.6 said will remain constant and
- Decreased by 10%
There has been an increase in rental adjustments by about 10%-20%. This is acceptable as demand for rental properties went on the rise. However, a majority of respondents said that it remained constant. This again can be attributed that a majority of owners who would have wanted their premises occupied instead of keeping it vacant. The market was also in a recovery mode and landlords would have a subdued mind set to increase rental.
Projected adjustment to rental rates in 2023
- 35.7% project an Increase by 10-20%
- 47% said it will remain the same and
- 17.4% were of the opinion that it will decrease by 10%
A high percentage of them feel the rental rates will remain reflecting what happened in 2022. As stated earlier the market is adjusting itself and landlords will be wary to increase to attract tenants as having the premises tenanted to give them some returns is key. Interestingly, 35.7% have the opinion that we will see an increase as properties in certain locations have greater demand and probably less supply thereby creating demand resulting in the rise of rental rates. A smaller percentage felt there will be a decrease of 10% and again that could be expected in locations where demand is low.
Overall Rental Market in 2023
- 67% said it will be better than 2022
- 25.2% said it will remain the same
- 7.8% said it will soften
Majority of the respondents feel that the Rental market will perform better in 2023. This is expected as there is a rise in transactions, population growth, rise in employment and transmigration from rural areas to the city, an improved economy will all contribute to a better performing rental market.
Adjustment to selling price in 2022 compared to 2021
Movement in the price of properties is an important factor as it reflects the asking price by sellers. The results are as follows;
- 32.2% said the price increased by 10-20%
- 29.6% said it remained the same while
- 38.3% said it decreased by 10%
Generally, the 38.3% who said the price decreased will largely be due to the challenges faced during the lockdown. Property owners who were businessman and employees were both affected as there was reduced income and in the job market, the loss of jobs and salary adjustments had a great impact. A number had to sell their properties to make ends meet, to avoid mortgage payments and to keep themselves afloat. Adjusting the price is also to create an urgency in sales as they could very well have tried marketing the properties above market price and have to adjust to be competitive. 32.2% indicated that there was an increase in the selling price and this be attributed to largely sellers of landed properties in strategic locations.
Projected adjustment to selling price in 2023
- 35.7% says price will increase by 10-20%
- 31.3% will remain the same
- 34% said decrease by 10%
67% responded that the price will remain and or increase by 10%- 20% in the year 2023. There is a common feeling that the price adjustment could be minimal as the market is recovering and there will be resistance to any price increase. However, we anticipate that there will be some adjustments in some pocket locations by owners who feel that their properties can demand higher prices. There is also an equal feeling from 34% of the respondents that the price will decrease by 10% reflecting that in many other locations the prices will see a slight drop. This can be accepted as purchasers will play a balancing factor in resisting price escalations and this is true in a recovering market.
PROPERTY MARKET OUTLOOK OF THE SECONDARY MARKET IN 2023
OUTLOOK ON THE SECONDARY MARKET
- 52.2 % felt that the secondary market will grow
- 31.9% said it will remain the same while
- 15.9% said it will see a decline.
It is worthy to note that close to 60%-65% of all transaction in the country are from the residential sector. Among these numbers also include project sales (primary market). Agents play a critical role in assisting Developers in project sales.
As such bulk of the transactions are from the secondary market due to its volume all over the country. From a subdued market in 2020, 2021 and with an improving market, the secondary market is expected to grow.
OUTLOOK ON PROJECT SALES
- 40.9% felt that the secondary market will grow
- 30.4% said it will remain the same
- 28.7% said it will decline while
There is always good demand for new project launches as investors buy to realize their investment in 24 months for landed property and 36 months for high rise either through a sale or rental. This market is picking up and 40.9% fell that it will grow further in 2023. Further, it is easier to purchase new projects as the outlay is much less thereby attracting those first-time house buyers.
OVERALL PROPERTY MARKET OUTLOOK IN 2023
- 58.3% concluded that the market will improve
- 18.3% said it will remain the same while
- 23.5% said it will decline
Combining both project and secondary market sales, the respondents feel that the overall property market will improve.
In conclusion, we in MIEA feel the same as there is stability in the country. As long as the fundamentals vis a vis, economy, interest rate, loan accessibility, employment rate coupled with government support through incentives are in check, the property market will grow. In the last proposed budget, there was a lack of government initiatives to support the property market except for the B40 group.
It is our call that the M40 group’s housing needs are also looked into and we request the new government under the able leadership of YAB Dato Seri Anwar Ibrahim, who is also placed priority on housing for Malaysians to include in the new budget some of the proposals made by MIEA in their budget proposal in 2022 to stimulate the secondary market. We will continue to support all government initiatives on the property market. The market is to improve and our wish is that all stakeholders need to support its growth.
Ms. Chan Ai Cheng
Malaysian Institute of Estate Agents