According to the PropertyGuru Consumer Sentiment Survey H1 2019, there is a year-on-year drop in exclusive interest in the primary market from 53 percent in H1 2018 to just 37 percent in the first half of this year though more than half of respondents intend to purchase a property in the next six months.
This was accompanied by a rise in overall interest in subsale properties from 47 percent to 62 percent of respondents over the same timeframe. This figure includes purchasers interested in both secondary and primary market properties, which comprised 48 percent of respondents in H1 2019.
Changing consumer preferences
Today, 48 percent of Malaysians are looking for both new and subsale properties, with 14 percent exclusively targetting properties in the secondary market. This may underscore the growing disparity between new project launches and actual demand, whether in terms of pricing, location or other considerations.
“Malaysians are becoming more flexible in terms of the kind of properties they are looking for. Just a year ago, new launches were the clear favourite, accounting for the majority of interest, with just 14 percent of home seekers willing to consider the secondary market as well,” said Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.
The introduction of the national Home Ownership Campaign (HOC) earlier this year – and its extension to 31 December – is not seen as a direct contributing factor, as its incentives and exemptions are designed to ease the country’s residential overhang in the primary market.
“This shift in preferences for subsale properties predates the HOC, with exclusive interest in the primary market among PropertyGuru Consumer Sentiment Survey respondents falling to 39 percent in H2 2018,” said Fernandez.
“It’s possible that location is the driving factor behind these changes, with purchasers prioritising older projects in central, more mature townships. Another factor which may play a role is immediacy, as subsale properties are available for home seekers to move into right away.”
Silver linings for demand
While consumer preferences may have shifted from the primary to the secondary market, purchasing patterns remain steady, with established suburbs and satellite townships surrounding city centres continuing to account for the majority of demand.
“We look into two areas of interest; current residence and intention to purchase. In both respects, Klang Valley and its associated neighbourhoods ranked at the top of the list for Consumer Sentiment Survey respondents,” said Fernandez.
Also, the Consumer Sentiment Survey H1 2019 findings highlighted the differences in purchasing behaviours between younger and older home seekers.
For the age group from 22 years to 39 years old, financial eligibility and price per square foot were core factors in decision-making, as reported by approximately 23 percent and 37 percent of respondents in the demographic respectively.
However, for those from 40 to 69 years old, security and safety were the key concerns, as cited by approximately 42 percent of respondents in the group. Location was a primary consideration across the board, with about 82 percent of respondents in both demographics reporting it as a priority.
Locational preferences varied markedly by age as well. Younger purchasers desired homes close to their workplaces and families, while older home seekers looked for projects near public transport, shopping centres and dining outlets.
“Savvy developers are offering home seekers more options when it comes to the types of units available, as well as their features. We’ve seen a lot more granularity there as industry players cater for different segments of the market, and of course unit sizes have been shrinking to lower barriers to entry for younger purchasers,” said Fernandez.
Market sentiment on the mend
Looking at broader market direction, the recent PropertyGuru survey found that sentiment had improved year-on-year, with the Property Sentiment Index rising from 39 in H1 2018 to 44 in H1 2019.
“We attribute the increase in performance to incremental improvements in terms of sentiments on affordability, as well as outlook on the current real estate climate. In particular, more home seekers are considering purchasing domestic properties, following a downturn since the latter half of 2017,” said Fernandez.
The percentage of respondents interested in buying locally declined from 57 percent in H2 2017 to 48 percent in H2 2018, with a possible correlation to the uncertainty surrounding Malaysia’s 14th general election in May that year. It has since returned to pre-election levels of 54 percent.
“As a whole, with the introduction of initiatives such as the HOC, which has already been extended to 31 December this year with proposals to broaden its purview to next year, as well as to the secondary market and even international purchasers, sentiment is on the mend,” said Fernandez.
“However, danger points such as pricing and financing should be addressed for the market to achieve sustainability in the long term, rather than relying on interventions such as the HOC.”