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IT’S a house buyers’ market in Malaysia, as increasing housing supply pushes developers and property owners to adjust prices to remain competitive, while the Overnight Policy Rate (OPR) cut makes for cheaper loans.

“Asking prices have been on the downtrend since the fourth quarter of 2016 (4Q16), bringing costs of home ownership down with them.

“In addition, OPR cuts such as Bank Negara Malaysia’s (BNM) in January often lead to lowered interest rates for loans and short-term hikes in approvals, making it an opportune time for property seekers,” PropertyGuru Malaysia country manager Sheldon Fernandez said in a statement yesterday.

Developers and owners across the board are tempering their expectations as the industry adjusts to the closing of the Home Ownership Campaign and a lack of strong catalysts this year, according to the PropertyGuru Malaysia Property Market Index (MPMI) 1Q20 report.

Malaysia’s overall MPMI fell 1.04 index points from 89.94 in 3Q19 to 88.90 in 4Q19, representative of a longer-term decline.

These adjustments, in conjunction with BNM’s recent OPR revision and Budget 2020’s emphasis on rent-to-own (RTO) schemes, serve to make properties in Malaysia a buyers’ market in the near term.

However, RTO financing may cost more in the long run than conventional loans, despite providing a reduction in upfront costs and risks of home ownership by doing away with down payments and allowing participants to opt out of purchases.

Kuala Lumpur (KL) house supply rose by 28.8 points quarteron- quarter (QoQ) and 87.56 points year-on-year (YoY) in 4Q19, the report showed.

The incoming supply of residential properties reflects sustained long-term confidence in KL as a hotspot, although this influx into a region that is already coping with sizeable existing stock does not suggest that the price average will be moving upwards in the near term.

“The recent global outbreak of Covid-19, while having no direct impact on Malaysia’s property segment to date, may see increased interest in domestic properties from international purchasers in the coming quarters, particularly in Penang,” Fernandez added.

Asking prices were mostly stable in Selangor among Malaysia’s major markets, with its MPMI declining just 0.08 index points from 91.51 in 3Q19 to 91.43 in the last quarter of 2019.

In Johor, asking prices fell 1.53 points from 101.12 in 3Q19 to 99.59 in 4Q19, after a period of relatively stable performance over the past few quarters. This was despite strong investor interest in the area, which realised investment figures of RM172.2 billion in the first half of 2019 against a target of RM383 billion by 2025.

“The downtick can be attributed to ongoing oversupply concerns in the state, with available residential properties increasing 25.32 points QoQ and 185.44 points YoY in 4Q19 — much higher than equivalent figures in KL and Selangor,” the report stated.

Penang was the only state to report less residential supply, contracting 13.51 points YoY.

However, stock grew 0.94 points QoQ in 4Q19, likely due to diminishing land availability on Penang Island.

Asking prices in Penang dipped 0.35 points from 95.74 in 3Q19 to 95.39 in 4Q19.

Nationwide, other notable trends include an increase in serviced apartment units. This will add another 38,441 serviced apartment units to an existing stock of 228,242 in the market.

“Confidence in this subsector may be due to a rising desire among young professionals and DINKs (double-income couples with no-kids) to live closer to urban centres and places of work to overcome the inconvenience of travel time and cost.

“In this scenario, mid-sized serviced apartments in well-connected locations that are either directly linked or close to commercial amenities are benefitting from increased demand,” Fernandez said, adding that this should be approached cautiously given the current oversupply of high-rise in some localities.

News Source: Malaysian Reserve, 19th February 2020.

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