PETALING JAYA: Residential properties are expected to remain subdued this year until the health crisis is brought under control, according to Knight Frank Malaysia’s first half real estate highlights.
In a statement, managing director Sarkunan Subramaniam said the residential market would continue to self-correct amid challenges brought on by the Covid-19 pandemic.
“There were fewer completions and launches in the first half of this year as the strict containment measures delayed construction works, project delivery, and completion of real estate transactions.
“In the secondary market, no property viewings and on-site surveys have been allowed since June,” he said.
Interestingly, according to Sarkunan, there appears to be pent-up demand in the housing market which is evident by the short burst of recovery in market activity when movement restrictions were temporarily lifted.
Knight Frank deputy managing director Keith Ooi reckoned that the high-end condominium market in Kuala Lumpur would continue to undergo price correction due to weaker demand amid rising inventory for both existing and newly built.
Similarly, in the tenant-led market, rentals remain under pressure due to weaker leasing demand, according to Ooi.
“The economy is still in its recessive phase and market confidence is expected to return gradually by early 2022 as buyers and financiers are all on cautiously optimistic mode,” he said.
“The property market is widely expected to start recovering on the back of a more positive outlook, following recent acceleration in vaccine drive, and strong interest from domestic investors shifting from the stock market to safer and less volatile alternative investment products,” Ooi pointed out.
To uplift the residential market, the government has introduced several key property-related policies and incentives have been announced under the various stimulus packages such as the extension of the Home Ownership Campaign or HOC until Dec 31, as part of the Pemerkasa Plus package, and the reintroduction of the six-month moratorium on bank loans for all individuals and small and medium enterprises under the National People’s Well-Being and Economic Recovery Package or Pemulih.
Other accommodative policies included the current record low-interest-rate environment with overnight policy rate maintained at 1.75%, the exemption of Real Property Gains Tax or RPGT for up to three residential properties for Malaysian individuals until the end of 2021, and the uplift of a 70% margin of financing limit for the third housing loan onwards during the HOC period.
On a positive note, Knight Frank said the HOC has been successful in reducing the property overhang with an estimated 34,354 residential units worth RM25.65bil sold from June 1, 2020, to Feb 28, 2021.
According to Knight Frank, the Covid-19 pandemic has fuelled the demand for residential properties, especially new landed housing outside the city – in established and upcoming suburbs with good connectivity where prices are more affordable and competitive. With the potential shift to hybrid work arrangements post-pandemic, buyers are seeking ideal living spaces with a higher emphasis on functionality and comfort.
“The general buyer focus has now shifted from investment towards creating a haven to live, relax and work in comfort due to the ‘stay at home’ orders amid the various phases of the movement control order.
“Thus, potential buyers and investors who have the financial capability may be enticed to enter the housing market – to buy a home for their own stay, upgrade or investment – taking advantage of the price discount, attractive deals, stamp duty exemption as well as the current low-interest-rate regime,” Sarkunan said.