Property market holding steady despite pandemic-induced woes

The property market is showing signs of resilience, with a new report by PropertyGuru Malaysia registering no change in overall asking prices for the final quarter of 2020 despite the economic impact from the ongoing battle against Covid-19.

The latest PropertyGuru Malaysia Property Market Index (MPMI) report, released today, said overall asking prices stayed at 88.60 points in both Q3 and Q4 last year.

PropertyGuru said this could be due to anticipation of the national Covid-19 vaccination programme, launched by Prime Minister Muhyiddin Yassin yesterday.

Country manager Sheldon Fernandez said in general the property market is expected to improve considerably in 2021, specifically in the second half of the year.

He said this view is further supported by an anticipated 5.1% economic growth forecast and Bank Negara Malaysia’s decision to maintain the overnight policy rate at 1.75%, with a possibility that it will be cut even further.

“It is prudent to note that these aren’t ‘typical’ times, and any worsening of the Covid-19 situation would translate negatively on all sectors of the economy,” he said in a statement.

The MPMI aggregates and indexes data from over 450,000 listings on PropertyGuru.com.my

The report found that the overall yearly supply continued to move upwards by 0.98% year-on-year, indicating that the supply of property stock is gradually making its way back into the market despite the disruptions brought on by the pandemic.

“It is important to note that quarterly fluctuation or inconsistencies in supply volume during the current pandemic climate are reflective of commercial activity limitations.

“This is caused by the tightening and loosening of movement control regulations rather than fundamental demand-supply factors that typically define the market movement,” Fernandez added.

In Selangor, the property market appears to be on a positive trajectory with the MPMI report showing a 0.84% increase in asking prices in the last quarter of 2020.

The company said Selangor is in “a strong position to remain resilient” despite the expectation that buyer behaviour will continue to be hampered by economic uncertainty in the months to come.

“Many will flock to the country’s most economically vibrant and populous state to seek out job employment,” it said.

In Kuala Lumpur, the MPMI report showed that asking prices dropped 1.80% quarter-on-quarter as upmarket properties continue to face downard pressure with a lack of international interest.

In Penang, asking prices also dipped 0.78% quarter-on-quarter. However, the report said with minimal price changes that have rarely breached the 2% year-on-year mark in the last two years, Penang is likely to be one of the first key markets to move back into positive price territory once the economy turns the corner.

In Johor, asking prices dropped 0.83% quarter-on-quarter as the state continues to address a large overhang of mismatched properties initially built to target international buyers under the Iskandar Malaysia plan.

PropertyGuru said much of this stock continues to be either beyond the price range of local buyers, which market analysts classify as a long-term issue that may take years to resolve.

Asking prices in Johor registered the largest drop among the four key regions from a yearly perspective, falling by 4.92% year-on-year.

“Overall, the property market will be defined by ‘movers’ and ‘waiters’ in the coming year, with some bullishly moving into the market to take advantage of prevailing favourable conditions, while others wait for further price drops or more stable financial situations,” Fernandez said.

“We also expect an early spike in transactional activity in 2021, as buyers rush to take advantage of the home-ownership campaign initiatives that end on May 31, 2021, while the current low price and low-interest rate prevail.”