PropertyGuru Malaysia has anticipated the corresponding effects on home seeker sentiment to be short-lived, further hinting on prospects for recovery in the near term.
“Income and employment have been adversely affected by the closure of non-essential businesses during the MCO, and many Malaysians are prioritising bread-and-butter issues,” says Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.
“This dampened sentiment is likely to persist through to H2 2020, though measures such as the government’s Economic Stimulus Package (ESP) announcements and Bank Negara Malaysia’s (BNM’S) six-month moratorium on financing payments are laying the foundation for the market to bounce back,” Fernandez added.
According to the property site, sentiment among home seekers was already in decline at the start of the year. The PropertyGuru Malaysia Consumeer Sentiment Study H1 2020 reported a drop in the Property Sentiment Index from 44 point in the previous year to 42 points early 2020.
This in return will see a fall in home loan applications as well as drop in mortgage applications by as much as 30 percent.
“However, the industry still moved forward, with 186,000 transactions worth RM27.9 bil. In addition, house prices as a whole have only continued to grow over the past few decades, highlighting the merits of property as an asset class,” said Fernandez.
During the outbreak of the Nipah virus which was in conjunction with the 1998 recession, volumes and values had seen a decline by 32.3 percent and 47.6 percent, recording the largest downturn.
Moving forward, terrace homes are expected to be the likely focus for property seekers as the PropertyGuru Malaysia Consumer Sentiment Study H1 2020 report found that terrace homes are the residence of choice (39%) among Malaysians.
The press release by PropertyGuru also pointed out that previous patterns observed during the crisis years are set to repeat themselves following the MCO and Covid-19 outbreak.
These include Bank Negara Malaysia’s reduction of the Statutory Reserve Requirement Ratio to 3.00 percent, moratorium on financing payments, OPR revision as well as revised voluntary EPF contribution guidelines in the government’s earlier ESP announcement.
“For those struggling to make ends meet, these measures help address costs of living while presenting an opportunity to rebuild savings. For those with leverage, it may be a good time to invest,” said Fernandez.