PropertyGuru Malaysia in its latest report revealed that potential homebuyers continue to resist higher asking prices amid a challenging economic landscape.
The report captured a steep downward trend for property enquiries on its platform with the Sale Demand Index declining by 10.2% QoQ. This is consistent with recent data released by Bank Negara Malaysia (BNM) where home loan applications saw a decrease of 11% in June QoQ. The lower demand from potential homeowners is likely linked to the Sale Price Index increasing by 2.1% QoQ, reflecting a continued rise in asking prices on listed properties.
Sheldon Fernandez, Country Manager, Malaysia shared, “The data generated continued to show a decrease in property demand, with Q2 2023 being the 4th consecutive quarter where there exists a visible gap between property demand and pricing. However, we hope to see an increase in consumers’ appetite for property as OPR rates are currently paused at 3%. Keeping in mind that current borrowing rates remain lower than the pre-COVID rate of 3.25%, we are hopeful that an uptick in demand is on the horizon as Malaysia’s inflation eases.”
Certain Areas in Malaysia Show Resilience
While the report highlights downtrends in property enquiries, there are notable areas across Malaysia that are growing to be favourable among potential homebuyers. In the second quarter, findings by PropertyGuru indicated an increase in enquiries in Cheras, Kuala Lumpur. The neighbourhood has been a hotspot for potential homebuyers as it boasts a mature township with convenient access to main highways and MRTs.
“As property values in urban centres continue to rise, homebuyers are shifting their focus to more affordable options in suburban locations. Strategically situated townships on the outskirts, such as Taman Connaught in Cheras and Pandan Indah in Ampang, offer properties with comparative value and connectivity at lower price points. Given current market conditions, it is unsurprising that recently completed projects in these areas are garnering increased interest from prospective homeowners,” shares Sheldon.
Permas Jaya, Johor, also witnessed an increase in interest in its property market, driven by factors such as affordability, closeness to Singapore, and long-term investment potential. Future projections suggest the Johor real estate market might experience further growth, given the anticipated operation of the Rail Transit System line (RTS) in 2026 and the potential revitalisation of the Kuala Lumpur – Singapore High-Speed Rail (HSR).
Similar to the previous quarter, the top two most viewed landed projects are located in Johor, with Leisure Farm maintaining its top spot on the list. Country Heights Kajang – a township in Kajang, Selangor, came out on top as the most viewed landed project within Klang Valley. Both are gated communities boasting spacious, green spaces, indicating that competitively priced properties with lush landscapes are still attracting higher demand from consumers.
Rental Market Affected by Higher Homeownership Cost
Following the drop in purchasing demand, the Rental Demand Index also recorded a decrease of 11.3% QoQ. This is likely due to rising rental prices which exceed the budgets of many prospective tenants, as indicated by the 4.9% QoQ increase in the Rental Price Index during the same period.
With the existing contrast between landlords’ expectations and tenants’ financial capability, this could indicate that more younger Malaysians are delaying their plans to move out of family homes and live independently.
Concurrently, the Rental Supply Index witnessed a 13.1% surge, reflecting the increase in property owners who remain optimistic with the gradual recovery of the economy along with increased job opportunities brought in by foreign investments.
In the second quarter of 2023, Princess Cove in Johor continued to be the leading high-rise development among prospective renters. Its strategic location near the Johor Causeway enhances its appeal to tenants working in Singapore, with more professionals seeking alternatives to the higher-priced Singapore market.
Upcoming and Ongoing Government Initiatives Provide Hope
Amid this challenging period where there exists a clear mismatch between seller’s expectations and consumer’s budgets, it is promising to see that the government is moving to address these ongoing concerns – the Local Government Development Ministry (KPKT) plans to review the National Housing Policy (NHP) to be aligned with the Malaysia Madani framework.
Sheldon added, “This is most timely as the NHP which was tabled in 2018 seems to have been placed on the backburner. PropertyGuru commends the new government’s action to revise the NHP and we are excited to see the implementation of the new strategies outlined in the Madani Economy Initiative, which will lead to a more inclusive housing market in the near future. As the government spearheads revitalisation efforts, we hope Budget 2024 will outline detailed strategies to restore confidence in public housing programs. Well-targeted policies ensuring better access to property, in tandem with prudent market monitoring, can help Malaysians secure their first homes.”
