By Editor -September 7, 2021
According to online property platform PropertyGuru, its data analytics and solutions arm reports that Malaysia’s residential property market transactions dropped of 44.7% in Q1 compared to the same period last year.
Of the overall number of property transactions across the country, a majority of 61.2% were found to be made by first-homebuyers (FHBs). In three of Malaysia’s major property markets – Klang Valley, Johor, and Penang, FHBs outnumbered purchases made by investors by 13.2%, 65.2% and 0.08% respectively.
Joe Hock THOR, Managing Director of PropertyGuru DataSense shares that sentiment over COVID-19 cases as well as a softer-than-expected GDP performance, is observed to be the culprit for a lower confidence in the market and a YoY dip in residential property transactions this year. However he adds that it is encouraging to note that incentives such as the My First Home Scheme and the Home Ownership Campaign have helped to drive first-homebuyers to take that step towards homeownership during this quarter.
Sub-sales were found to have dominated the market during this quarter, with many property owners selling their assets at competitive prices for liquidation, offering both FHBs and investors alike an opportunity to purchase them at below market value. This is especially prominent in the Klang Valley, which recorded a three-year high for sub-sale transactions at 83.72%.
This sector has typically appealed to more seasoned investors largely due to the ability to place a down payment on the unit, making it easier for an investor to invest in several properties. The secondary market also allows greater access to property, particularly landed units, in better locations.
With a large portion of the nation’s workforce working from home since the start of the pandemic, the type of properties that buyers are purchasing has also changed. This is reflected in the transaction data from Q1 2021, which found that homebuyers are favouring larger, more spacious units in the RM300,000 to RM500,000 price range. Buyers preferred landed units over high-rise in Q1 2021, with terrace houses making up 54% of transactions in Malaysia followed by condominiums/apartments (18%).
Many among the top 10 projects with the greatest number of transactions this quarter are areas located away from city centres in self-contained townships such as Bukit Sentosa and Bandar Bukit Beruntung in Rawang, Bandar Putra in Kulai.
MyProperty Data Reveals Investors Make Up 81% of Residential Property Purchases in Klang Valley in 2020
MyProperty Data, an online property data company under PropertyGuru has revealed that 81.1 percent of investors dominated the residential property purchases in the Klang Valley in 2020 and interest is turning towards subsale properties.
Joe Hock Thor, Managing Director, MyProperty Data shared, “The subsale residential property market in Malaysia has seen steady growth in the last few years, and this upward trend is further accelerated by the effects of the pandemic. There is a rise in overall interest in the secondary market as some property owners are selling their assets at lower prices to maintain liquidity, creating opportunities for investors to acquire them below market value.”
The Real Property Gains Tax exemption also the reason some investors to cash in their existing assets and make a profit. This is reflected in the spike in the average number of subsale listings tracked on PropertyGuru.com.my, which grew by 21.3 percent between 2019 to 2021.
Additionally, the data showed economic downturn in 2020 has led to a 47.2 percent drop in total number of residential property transactions in Klang Valley.
However, the impact is most visible among first-time home purchasers, who used to account for 55.5 percent of overall property transactions in the area in 2019 but have subsequently decreased to 18.9 percent in 2020. Meanwhile, investor demand for residential properties in the area continues strong, with a 36.6 percent year-on-year increase in investor activity from 2019 to 2020.
In 2020, the property market in Klang Valley recorded the lowest new development purchase in the last five years, with a 90.6 percent and 38 percent YoY decrease in the number of transactions made by first-time home buyers and investors, respectively. On the other hand, the total number of transactions in 2020 for subsale properties was the lowest for first-time home buyers (79.4 percent YoY decrease), but the highest for investors (9.6 percent YoY increase), in the same five-year period.
This change in purchase behaviors is more prominent among landed properties. Between 2016 and 2019, the landed property transactions from subsale and new development properties are split at approximately 70 percent and 30 percent respectively. This has shifted to 84 percent and 16 percent respectively in 2020.
Meanwhile, for high-rise property transactions, the split between sub-sale and new development properties have remained consistent at around 80 percent and 20 percent respectively across the last five years.
“To help spur the industry and to increase homeownership, there need to be greater incentives offered to first-time homebuyers – be it attractive rebates from developers or assistance from the government,” Joe said.
The government’s recent decision to extend the residential home stamp duty exemption scheme under the Home Ownership Campaign until this year-end, will also alleviate the burden of home buyers and support the sector’s recovery.
“Separately, the pandemic has presented a prime opportunity for investors to capitalise on the discounted prices of properties, the various incentives available, as well as the current low-interest rate environment to pick up quality assets for the future. With properties often considered as a hedge against inflation, these assets may offer a long-term boon with the eventual market recovery and stabilisation,” he added.