Recovery in sight for property market by 2H21

Rehda president Datuk Soam Heng Choon

PETALING JAYA: Malaysian developers are more optimistic about the outlook of the property industry in the second half of 2021 compared with the first half of this year, on the expectation that the broader economy will recover and boost buying sentiment.

In a survey of 134 respondents by the Real Estate and Housing Developers’ Association (Rehda), it was revealed that 20% are optimistic about the property market and sales performance in the second half of 2021, compared with just 8% in the first half.

The survey also showed that 26% are optimistic about residential sales growth in the second half of 2021, compared with just 8% in the first half.

Rehda president Datuk Soam Heng Choon said the global vaccine rollout will improve the country’s economic outlook, which will in turn spur the local property sector.

“With more countries recovering from Covid, our trade will improve and this will boost our economy.

“When the broader economy recovers, the property market will, as well,” he said during a media briefing today.

Meanwhile, in its property industry survey for the second half of 2020 and market outlook for both the first and second half of 2021, Rehda said a total of 13,037 units are being planned for launch in the first half of 2021, consisting of 12,874 residential units (6,998 strata units and 5,876 landed units) and 163 commercial units.

Amongst respondents with future launches, the majority of them (83%) anticipate their sales performance to be 50% and below for the first six months.

The survey revealed that Kedah, Perlis, Negeri Sembilan, Pahang and Selangor planned to launch residential units within the RM250,001 to RM500,000 price range, whereas Johor, Penang and Wilayah Persekutuan aimed to offer units priced between RM500,001 and RM700,000.

Additionally, Rehda said respondents were neutral about the economic and business outlook, as they were concerned about consumers’ purchasing power in the first half of the year.

The same was reported with the property industry outlook, specifically with regards to residential sector growth.

However in both cases, Rehda said there are increased optimism for the second half of 2021.

In terms of performance for 2020, Rehda said the second half of last year saw the launch of 12,640 residential units compared with 12,556 units in the second half of 2019, with two-and-three-storey houses being the most popular (4,120 units) followed by service apartments (3,250 units) and apartments / condominiums (3,059 units).

Price-wise, 80.8% of the units were in the range of RM250,001 and RM500,000; and between RM500,001 and RM700,000; while 7.8% were within the RM100,000 and RM250,000 range and 6.4% were priced between RM700,001 and RM1mil.

Separately, Rehda said sales performance was better in the second half of 2020, increasing from 43% in the second half of 2019 to 45% in the period under review.

Out of the 5,736 residential units sold, 2,467 units were in the two-and-three-storey terrace category, while the second top performing type was service apartments with 1,225 units while 1,082 units of apartments / condominiums were sold in the second half of 2020.

Rehda said first time buyers made up the majority of purchasers in the period under review, while most homes bought were for the purpose of self-dwelling, purchasing for family members and for investment.

In terms of unsold units, 64% of respondents reported to have unsold residential units in the period under review, with the majority of them having less than 30% unsold stock for both residential and commercial types.

At 30%, terrace houses had the highest percentage of unsold residential type, followed by semi-detached / bungalow at 29% and apartment / condominium at 26%.

Rehda said end-financing issues continued to be the main reason for loan rejection in the second half of 2020, which affected 92% of respondents.

Other top reasons were unreleased Bumiputera units and low demand / interest.

Separately, Rehda said overall cost of doing business increased by 12% in the second half of 2020, according to 51% of the respondents.

The survey revealed that 98% of respondents were affected by the current economic scenario, while those that were “highly and severely affected” increased to 42%, compared with 26% in the second half of 2019.

Compliance cost remained the number one cost component affecting cash flow, followed by material and labour cost, as well as land cost.