KUALA LUMPUR: The Malaysian property market, which has been lacklustre for the past few years, may see an uptick next year as housing demand remains strong, said PropertyGuru CEO Hari V. Krishnan.
“When we look at Malaysia, we’re coming off few years right now of the property market cooling off significantly. Late last year, we saw a slight uptick in terms of transactions as well as sales. When we look at asking prices on PropertyGuru Malaysia in first quarter this year, they were actually marginally down,” he told SunBiz in an interview recently.
However, demand remains positive, with the PropertyGuru Malaysia portal recording a 30% year-on-year increase in enquiries and 35% year-on-year increase in unique visitors, since the government extended the Home Ownership Campaign (HOC).
“We have just under half a million listings here in Malaysia and over 9,000 property agents and that number is increasing significantly. So we are seeing, both on the supply and demand sides, good increases on PropertyGuru Malaysia,” said Hari.
Although the market is bottoming out, he said, it will take some time before the market sees any significant growth due to the large property overhang. At the same time, developers and sellers have become more pragmatic with asking prices in order to ensure that the inventory they have are getting sold.
“A lot of the inventory that was part of the overhang, was actually ideal for property investors. If someone was looking for home ownership, we believe the sweet spot is somewhere between RM300,000 and RM500,000. A lot of the properties in the overhang were priced much higher than this.
“What we’re going to see is a cycle through which this overhang is removed from the market, ideally investors will buy it out, then you will find more affordable housing come online,” he said.
According to PropertyGuru’s biannual consumer sentiment survey in Malaysia, 63% of Malaysians said that more needs to be done to address the issue of affordability.
“Essentially we need more housing within the range that they can afford. I think that’s going to be the new supply that comes online in 2020,” Hari said.
To improve the matching of demand with supply, PropertyGuru launched the Home Loan Pre-Approval for Malaysian users, which is also part of the group’s long-term commitment to financial literacy and helping Malaysians understand what they can afford.
“For many years, we had a mortgage calculator in Malaysia and people have used it. We believe that’s insufficient now. All the solutions in the market are all just mortgage calculators.
“Home Loan Pre-Approval is unique because it has deep integration with the banks, but far more importantly, that actually works with the credit bureau of Malaysia and it does checks with Bank Negara Malaysia’s eCCRIS to help Malaysians understand their credit score, essentially their creditworthiness. Then, with 99.9% accuracy, we can tell you what home loan will be granted by the banks,” said Hari.
Home Loan Pre-Approval, which is integrated with Alliance Bank, RHB Bank and Hong Leong Bank, has already been utilised by 10,000 Malaysians and is part of PropertyGuru’s Own Your Home Campaign, which has facilitated some 20,000 Malaysians in getting their dream home. The group aims to grow this to 100,000 by next year.
“What we are trying to do is to start the process of educating Malaysians on knowing how much they can afford to buy, then putting them in front of the right listings. Making sure that they are only looking at homes that they can afford to buy, that they can get a home loan for,” said Hari.
Meanwhile, he noted that Malaysian real estate has been attracting significant interest from Hong Kong investors, with demand overtaking those from China recently.
“In Malaysia, we are seeing demand coming out of Hong Kong for sure. China has its ebbs and flows. Few years ago China was very large in terms of our traffic but domestic traffic was still much, much larger. Among international investors, China was large but now we are seeing Hong Kong being sizeable for Malaysia,” he said.
Hari said these investors are eyeing the usual spots, namely Kuala Lumpur, Selangor, Penang and Johor.
Meanwhile, Malaysian investors, on their part, were eyeing properties in Thailand last year, including Bangkok and resort locations such as Phuket. This is in addition to the continuous two-way demand for real estate between Malaysia and Singapore.
“That remains the case. What was new was the demand for Thailand coming from Malaysia. This year, post-elections and HOC, we see the market being a lot more inward focused,” Hari said.
According to JPPH, Johor has the largest number of unsold completed serviced apartments and SoHo units at 7,714. JPPH notes that it rose a whopping 191% from the 2,647 units recorded a year ago. The overhang in serviced apartments is valued at RM6.16 billion compared with the state’s residential overhang of RM4.44 billion.
This means the total overall value of its unsold serviced apartments is 1.5 times that of residential housing (terrace homes, semi-Ds, bungalows, townhouses, apartments and condominiums). In summary, Johor has the highest number of completed unsold units in Malaysia at 6,053. This is a 55% increase from the 3.901 units a year ago.
Though not as severe, Selangor and Penang recorded an increase in overhang units as well, up by 25.81% and 43.59%, respectively.
Keeping the less-than-rosy residential market prospects in mind, here are some of the likely property trends to emerge this year:
#1 It will be a renter’s market
The new supply of the completed units plus those from existing units will lead to a downward pressure in the rental market causing rental prices to fall. This is because rent-seekers will be spoilt for choice while landlords will be fighting for tenants.
This will make it ideal for rent-seekers as landlords will most likely be open for price negotiations. Meanwhile, landlords will be on the losing end, regardless of whether they manage to secure a tenant or not.
In the former, the rental will most likely not be able to cover the mortgage resulting in negative cash flow. In the latter, landlords will have to cover the mortgage themselves. Those who cannot will have no choice but to let go of their units.