Property sector demand on the downtrend
Published on: Wednesday, May 10, 2023
By: Bernama
“Potential homebuyers are likely to delay their purchasing plans because of the higher borrowing costs and rising cost of living. Currently, it is still too early to gauge how much impact this will have on the market,” he said.
Kuala Lumpur: Property demand and supply in Malaysia eased at the beginning of the year with an overcast economic outlook, according to PropertyGuru Malaysia.The online property portal said that based on the insights from its market data and analytics platform, DataSense, there is a downward trend in the sale demand index with property enquiries decreasing by 5.6 per cent quarter-on-quarter (q-o-q).
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“While inflation is projected to moderate in the coming months, global economic uncertainties have affected the appetite of Malaysian buyers for big-ticket purchases.
“Similarly, the sale supply index saw a slight decrease of 0.6 per cent as property owners continued the wait-and-see approach towards their investments,” PropertyGuru Malaysia said in its latest release of Malaysia Property Market Report (MPMR) for the second quarter (Q2) of 2023.
Country manager, Malaysia, Sheldon Fernandez said the Bank Negara Malaysia’s decision to raise the overnight policy rate by 25 basis points to three per cent would make it difficult to see an uptick in property demand.
“Potential homebuyers are likely to delay their purchasing plans because of the higher borrowing costs and rising cost of living. Currently, it is still too early to gauge how much impact this will have on the market,” he said.
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He said there are cumulative issues of housing affordability, higher cost of investment, mismatch of demand and supply and “sick” housing projects which have been persistent in the local market and remained unsolved at the moment.
“While we do see the government taking the first steps to address these issues, developers must also play their part in assessing what homebuyers need because that’s changed over time,” he said.
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He said overall in Malaysia, the rising prices driven by global uncertainties would continue to contribute to the current housing affordability issue.
“As property ownership costs are expected to increase with the OPR hikes, we foresee property buyers and sellers alike will continue to navigate a challenging and unpredictable property market.
“However, we are cautiously optimistic that the economy will show improvement in the second half of 2023 and we will continue to look out for more positive signs of growth in the residential property market,” he added.
Meanwhile, the report said the asking prices of properties listed on propertyguru.com.my has increased by 1.6 per cent q-o-q in Q1 2023 as sellers are likely not keen to lower prices against the backdrop of an uncertain economic climate and the global increase in construction costs paired with recent labour shortages have also pressured developers to hike their prices to cover the increased costs.
It said the boost in investments from companies like Tesla and AWS as well as China’s RM170 billion investment commitment is likely to spur job creation and push infrastructure development in Malaysia in the near future but buyers are also aware of the external pressures caused by global inflation and remained cautious with their purchasing decisions, especially with the current higher borrowing costs.
“If property prices continue to peak with demand lagging, a global recession or economic shock could lead to a price correction. If it happens, property prices adjust accordingly to reflect the slower demand,” it said.
It said indexes in the rental market mirrored the trends in the property sale market, tracking a decrease in the rental demand index by 6.3 per cent.
“This is likely due to the substantial increase in rental prices with the rental price index rising by 4.7 per cent q-o-q,” it said.
The report also said that Johor emerged as the most popular area of interest for property investments.
“Johor’s development surge is anticipated to persist fueled by last year’s RM51.1 billion investment in data centres,” it said.
It said as a burgeoning digital hub, Johor is attracting attention to its real estate market and the prospect of new job opportunities might entice more Malaysians to relocate to the peninsula’s southern region.
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