THERE is improved purchasing sentiment in the local property market, thanks to initiatives like the Home Ownership Campaign (HOC).
The PropertyGuru Market Index showed a 0.8 per cent increase to 86.2 in the second quarter of this year from 85.4 in the first quarter.
The HOC, a joint effort by the Housing and local government ministry and Real Estate and Housing Developers’ Association Malaysia (Rehda), was unveiled early this year as one of the housing initiatives under the 2019 Budget to reduce the country’s “overhang property”.
Overhang refers to completed residential units which remain unsold or have been on the market for at least nine months.
According to the Malaysian Property Market 2018 Report, released by the National Property Information Centre, the number of overhang units last year increased 30.7 per cent to 32,313 units from the previous year.
Young working adults in Malaysia are struggling to buy a house as residential properties are getting more expensive, especially in urban areas.
The objective of the HOC is to assist first-time buyers to own a property and help reduce unsold properties in the market.
HOC 2019 only applied for properties sold between January 1 and June 30 of this year but has been extended to December 31 following strong interest in the campaign and recommendations for an extension from buyers and developers.
PropertyGuru Malaysia country manager Sheldon Fernandez said improved purchasing sentiment in the market was also due to stamp duty exemptions and Bank Negara Malaysia’s downward revision of its Overnight Policy Rate to three per cent.
Fernandez said these factors had contributed to upward ticks in asking prices for Kuala Lumpur, Penang and Selangor. However, they were not enough to overcome downward pressures in Johor, including a proposed ban on property sales to foreigners for selected projects in the third quarter of 2018.
“This comes despite a growing overhang in Malaysia of 53,078 units as of the first quarter 2019, including 32,936 residential units worth RM19.9 billion,” he said.
TOP THREE MARKET REVIEW
1. KUALA LUMPUR
The Kuala Lumpur market index witnessed a 0.8 per cent quarter-on-quarter increase in asking prices in Q2 2019, but from the long-term perspective, there was a stable downtrend.
Fernandez attributed the wider downturn to the ongoing mismatch between property supply and demand, where there was demand for affordable properties, but luxury projects were being launched instead.
“In general, home seekers are looking for properties below RM500,000 in Klang Valley. Sentiment is more positive moving out from the city centre, as Q2 2019 marked Selangor’s third consecutive quarter whereby asking prices have risen,” he said.
He said a year-on-year increase in supply from Q2 2018 to Q2 2019 of 42 per cent was seen this term, reflecting that sellers are more confident in the market as demand picks up from previous terms
2. PENANG
Fernandez said the asking prices in Penang have been more volatile, with its index showing a steady decline from Q1 2016 to Q4 2017.
The Penang market, however, has remained resilient since Q4 2018 as it grew 0.2 per cent from 92.8 in Q1 2019 to 93.0 in the second quarter.
Fernandez said oversupply is less of a concern than in metropolitan areas further south, with a 28 per cent increase in supply registered during the term.
“The appetite for affordable-ranged properties continues, with units below RM250,000 continuously in demand. The state government is increasing its efforts to meet these calls,” he said.
3. JOHOR
Residential asking prices in Johor went against the grain, said Fernandez.
Johor was the only state with an upward growth trajectory since 2015, ending with a 0.5 per cent quarter-on-quarter downturn in Q2 2019. Its long-term expansion can be attributed to consistent and heavy investment in the Iskandar Malaysia economic corridor, which is reflected in the state’s 118 per cent increase in supply volume in the second quarter, he said.
“This indicates that Johor properties are experiencing good take-up rates and prices are beginning to re-adjust. Year-on-year asking prices dropped three per cent, reflecting that the market is likely to see continued self-correction.”
HOME FINANCING
Jones Lang Wootton executive director Prem Kumar said property developers have taken heed, especially in terms of the profile of market demand, and this recognition of the change in market dynamics will ultimately be the main thrust towards effective stabilisation of the real estate residential market.
“The key economic drivers of the market, such as supply and demand, do not appear to have achieved a clear-cut equilibrium. There are still gaps which are obvious and need to be plugged before a more definitive direction of the market can be achieved,” he said.
Prem said more needs to be done for Bottom 40 per cent (B40) households.
According to Prem, B40 households continue to face challenges due to the continuing severe mismatch between property price levels and income levels.
“It is imperative that the government, together with financial institutions, formulate a specific financing structure which goes far beyond existing schemes such as the rent-to-own programme. A comprehensive platform will have to be formulated which addresses forms of ownership, access to funding, availability of specific product types, stakeholder participation, government grants, and more.”
Prem said a well-structured platform, which takes into consideration medium- to long-term property ownership sustainability aspects, would be essential in mitigating the crux of the problem whereby B40 households in the current environment are left entirely on their own and overwhelmed by complexities related to property purchases, especially with respect to securing funding within the existing structure of the real estate market.