The number one reason Malaysian home buyers are looking to purchase a new home this year is for investment, as shown by the PropertyGuru Malaysia Consumer Sentiment Study H1 2020.
Almost half of the respondents, or 47 per cent, are looking to purchase a new home, while three in 10 Malaysians are looking for bigger space and greater convenience.
Malaysians are looking to make space for a bigger family. It is a motivator for younger homeowners. The more family members, the more space you'll need for your stuff.
Greater convenience comes in third followed by personal space.
While homes in cities tend to be more expensive than in suburban areas, they are more valuable because of accessibility, appearance, and amenities that come in the neighborhood as well as plans for development.
The least important reason for purchasing a home this year is that the home buyers are selling their existing property at a favourable price, or they are downgrading to a smaller home.
But will they buy in the next six months?
Conservatively, the Covid-19 outbreak and the movement control order (MCO) may see property transaction volumes decline in the short term by up to 30 per cent, as seen in 1998, during the Asian financial crisis and Nipah virus outbreak, says PropertyGuru Malaysia country manager, Sheldon Fernandez.
He said these numbers are reflected in the US, which has already seen mortgage applications drop by 30 per cent.
“Closer to home, the impacts are being felt by Malaysians from every walk of life, not just by developers and agents, but by businesses across the board and friends and family members as well," he said.
Fernandez said that moves such as Bank Negara Malaysia’s (BNM) reduction of the Statutory Reserve Requirement Ratio to 2.00 per cent, a moratorium on financing payments and OPR revision as well as the government’s revision to voluntary EPF contribution guidelines have eased financing concerns for property seekers to a large degree.
However, visibility for developers and agents is at its lowest ebb.
Fernandez said that through its initiatives, PropertyGuru aims to support developers in Malaysia through this critical period, as weakened consumer sentiment is projected to persist through the second half of this year.
"While unbilled sales may buffer some industry players, those with high gearing may have challenges sustaining operations until the market’s projected recovery in 2021," he said.
"Our mission is to help people, whether they’re home seekers, investors or developers, make confident property decisions. As the property market adjusts to the new paradigm moving forward, our role in supporting property developers and home seekers in the digital space is more crucial than ever before," he said.
Need for digital uptake
Fernandez said there is a need for digital uptake, further underscored by the impact of the MCO on industry players.
The MCO came into force on March 18 and ended on March 31. However, it was extended on April 1 and is scheduled to end on April 14.
Today, the government is expected to announce whether the MCO will be further extended.
Fernandez said developers with online presences will be better prepared to weather the storm, and better positioned to carve a niche for themselves in the new operating landscape moving forward.
This landscape includes a potential influx of property queries as pent-up demand from the MCO period reasserts itself following a sharp market recovery, he said.
"This pattern has been seen in historic transaction volumes during years of recession and previous viral outbreaks, as tracked by the National Property Information Centre. It is also being seen now in China, both the frontline of the Covid-19 outbreak and the nation furthest along the recovery curve. "Property sales in 30 major cities there have tripled with the abating of the coronavirus crisis, pointing to potential upswings in other affected markets," said Fernandez.
Fernandez said the tendency for the property market to “bounce back” following crisis years has been attributed to investor activity as they restructure portfolios, with properties as an attractive asset class.
In Malaysia, investors account for nearly half (47 per cent) of property transactions, as per the PropertyGuru survey.