As highlighted by the PropertyGuru Market Index (PMI) Q3 2019 report, Penang's price index was down 1.5 per cent from 94.8 to 93.4 in the third quarter (Q3) 2019. - NSTP/AIZUDDIN SAAD

Asking prices for properties across Malaysia declined quarter-on-quarter (QoQ) with Penang taking the steepest dip.

As highlighted by the PropertyGuru Market Index (PMI) Q3 2019 report, Penang's price index was down 1.5 per cent from 94.8 to 93.4 in the third quarter (Q3) 2019.

The decline follows consistent growth since Q3 2018, with its PMI peaking in the first quarter this year at 94.8 points.

PropertyGuru Malaysia country manager Sheldon Fernandez attributed the growth over the past year to increased demand following the 2019 Budget’s stamp duty exemptions and other incentives, as well as increased sentiment concurrent with the national Home Ownership Campaign (HOC).

However, the discounts and other promotional measures associated with the HOC may have had a downward impact on asking prices in the long term, said Fernandez.

"As with other markets in Malaysia, the long-term trendline for Penang exhibits a marked decline, pointing towards a buyer’s market moving forward. This is reflected in a YoY decrease in its PMI of 0.6 per cent in Q3 this year, with sellers adopting defensive positions in response.

Continued increase in supply was seen in Q3 2019 at 22 per cent, a positive turn compared to the previous quarters in 2018, demonstrating that sellers evidently want to let go of their properties, but are still adopting a wait-and-see approach,” he said.

Asking prices for properties in Kuala Lumpur (KL) fell 0.9 per cent in Q3 this year, following a brief spike in the second quarter.

Fernandez said, this comes amid a longer-term downward trend since Q1 2015, though this was less marked than Penang’s decline over the same period.

“There is still a large portion of mismatched Kuala Lumpur properties in the market, and properties in the affordable range are still widely in demand, especially with a highly desired address like KL. It remains to be seen how Budget 2020’s revised foreign ownership guidelines will impact these mismatched units,” said Fernandez.

He said, as with Penang, the downturn in asking prices this quarter may be attributed to downward pressure on prices due to the HOC.

PropertyGuru Malaysia Country Manager Sheldon Fernandez

"The trend can also be seen as a longer-term adjustment as demand for affordable housing and developer preferences for higher-margin property tiers find equilibrium," said Fernandez.

Sellers in Selangor also adjusted asking prices 0.8 per cent downwards in Q3 2019, with its PMI falling from 91.9 to 91.1.

Johor was the only state among the major markets to showcase positive trends in Q3 2019, with a long-term uptrend in asking prices since Q1 2016.

QoQ asking prices remained static in the third quarter; however, this was an improvement over the declines seen in other states.

"It’s worth noting that with Johor realising investment worth RM172.2 billion in H1 2019, 39 per cent of which comprised foreign direct investment, positive sentiment is likely to spill over into its property segment. As such, the state’s strong price and transaction momentum are likely to continue into the near future. Supply volumes, which stood at a 118 per cent increase in Q2 2019, maintained an excellent trajectory this quarter with 119 per cent growth, indicating that the state’s properties are experiencing good take-up rates thanks to the demand from both locals and foreigners, thus allowing prices to re-adjust,” said Fernandez.

Moving forward, Fernandez said that mixed macroeconomic indicators, both internal and external, indicate a neutral outlook for property in the next few quarters.

Dampening factors include ongoing US-China tensions, with slowdown effects for countries with high China exposure, such as Malaysia.

“While the Ringgit has strengthened following positive undertones in recent US-China trade talks, and interest rate environments in general have improved following rate cuts by Bank Negara Malaysia and the US Federal Reserve, the conclusion of the HOC, continued application of revised real property gains tax (RPGT) rates and absence

of strong driving provisions for property in the recent Budget spell out a leaner year for property ahead,” said Fernandez.