THE EDGE MARKETS. KUALA LUMPUR. 19TH JULY:
Sarkunan: Potential buyers and investors who have the financial capability may be enticed to enter the housing market — to buy a home for their own stay, for an upgrade or for investment — taking advantage of the price discount, attractive deals, stamp duty exemption as well as the current low interest-rate regime.
Knight Frank Malaysia managing director Sarkunan Subramaniam noted that the residential market will continue to self-correct amid challenges brought on by the Covid-19 pandemic.
“There were fewer completions and launches in 1H2021 as the strict containment measures delayed construction works, project delivery and completion of real estate transactions. In the secondary market, no property viewings and on-site surveys have been allowed since June,” he said.
“The economy is still in its recessive phase and market confidence is expected to return gradually by early 2022 as buyers and financiers are all on cautiously optimistic mode,” said Knight Frank deputy managing director Keith Ooi.
Malaysia’s gross domestic product (GDP) for 2021 is expected to be revised downward due to the adverse impact of the prolonged pandemic on various economic sectors. The publication, featuring the findings of the property market performance across Klang Valley, Penang, Johor Bahru and Kota Kinabalu, stated that the country’s GDP was previously projected at between 6.0% and 7.5%.
Ooi: The property market is widely expected to start recovering on the back of a more positive outlook and strong interest from domestic investors shifting from the stock market to safer and less volatile alternative investment products.
In the period under review, Knight Frank observed price corrections for the high-end condominium market in Kuala Lumpur — both existing and newly built — due to weaker demand despite rising inventory. Similarly, in the tenant-led market, rentals remain under pressure due to weaker leasing demand.
To uplift the residential market, several key property-related policies and incentives have been announced under the various stimulus packages such as the extension of the Home Ownership Campaign (HOC) until Dec 31, 2021 as well as the reintroduction of the six-month moratorium on bank loans for all individuals, and small and medium enterprises (SMEs).
Other accommodative policies include the current record low interest rate with overnight policy rate at 1.75%, the exemption of Real Property Gains Tax for up to three residential properties for Malaysians until the end of 2021, as well as the uplift of a 70% margin of financing limit for the third housing loan onwards during the HOC period.
Ooi saw a pent-up demand in the housing market, evidenced by the short burst of recovery in market activity when movement restrictions were temporarily lifted earlier.
“The property market is widely expected to start recovering on the back of a more positive outlook and strong interest from domestic investors shifting from the stock market to safer and less volatile alternative investment products,” said Ooi.
Covid-19 has accelerated the adoption of technology in property development with more developers embracing digital marketing to clear unsold inventories and boost sales of newly unveiled products.
It has also fuelled demand for residential properties especially new landed housing outside the city, in established and upcoming suburbs with good connectivity where prices are more affordable and competitive. Buyers are seeking living spaces with a higher emphasis on functionality and comfort due to the potential shift to hybrid work arrangements post-pandemic.
Sarkunan reckoned that the general buyer focus has now shifted from investment towards creating a haven to live, relax and work in comfort due to the movement control order.
“Thus, potential buyers and investors who have the financial capability may be enticed to enter the housing market — to buy a home for their own stay, for an upgrade or for investment — taking advantage of the price discount, attractive deals, stamp duty exemption as well as the current low interest-rate regime.
“Looking ahead, there is a window of opportunity as the deployment of vaccines is accelerated to allow the gradual reopening of more economic sectors. The resumption and commencement of new mega-developments, supported by improved infrastructure, will boost economic activities and also aid in the recovery of the property market,” said Sarkunan.