MIEA: Stronger Property Market 2023

Growing confidence in the property market

Confidence is growing in the property market based on the JPPH Q3 2022 performance review. Quarter 3, 2022 (July – September), seemed to have been a tumultuous period in view of the then pending 15th general election and the many uncertainties that besieged the country. This always causes concern for real estate practitioners as we are unable to chart the course and direction of the property market in that respective quarter.

To our astonishment the market rallied to show improvements in the third quarter as the NAPIC report showed that in Q1 of 2022 there were 94,556 units sold, while in Q2 saw 93,456 transactions showing a small decline. Q3 was a better performing quarter with 105,204 transactions an increase of 12.6 % over Q2. This is a good indication that there is a returning of confidence in the marketplace after the Q1 & Q2 decline in 2022. As in previous years, the residential, agricultural and commercial sector took precedence. The Residential sector contributed 62.5%, while agricultural and commercial contributed 21.9% and 8.1% respectively.

Overhang is slightly below 30,000 units

It was recorded that there was an overhang of 29,534 units out of which 24.0% were priced below RM300,000 and 29.3% were priced between RM300,000 to RM500,000 respectively. This contributed to 53.3 % to the total overhang of properties. There seems to be mismatch as the government is emphasizing to provide affordable homes but the take up rate is lagging.

Stamp Duty savings for first time home buyers

For first time home buyers there is stamp duty savings for purchasing homes below RM500,000 and also 50% savings on stamp duty for properties between RM500,000 – RM1million. Probably a study needs to be done as to why there is such a high overhang in this price segment. Interestingly, the overhang for properties priced between RM500,000 and RM1,000,000 is at 31.6% which is in a far more manageable position in comparison.

Overhang is not highest in the Klang Valley

Generally, when we talk about overhang, we get alarmed that the Klang Valley has the highest number. The statistics show otherwise; Penang and Johor have 5,222 and 5,348 overhang units respectively compared to the Klang Valley at 4,386. Perhaps it is time to reduce new supply in the state of Johor and Penang to address this overhang in the years to come. More study and better assessment matrix need to be in place to determine actual demand before new supply enters the market.

High rise vs landed, which is more?

Predominantly new projects being launched are still in high rise (67.8%) compared to landed (32.2%). We cannot generally presume the demand for the type of properties based on the units launched that buyers are looking
for, as the market is becoming sophisticated and many factors i.e., scarcity of land for landed developments, demand for inner city living, types of properties being offered with cost of construction and rise in land cost which has significant impact on the ordinary homebuyer.

How much are these newly launched projects?

It is also interesting to note that 68.6% of newly launched projects are priced below RM500,000 and 97.7% are below RM1million. As to the outlook of the 2023 property market, the data supports our views for a promising year 2023. With the new government in place headed by our YAB Datuk Seri Anwar Ibrahim as Malaysia’s 10th Prime Minister and the newly appointed Cabinet Ministers we see renewed confidence in the market. As the new Finance minister, we look forward to YAB to a renewed commitment to see our profession grow as Estate Agency practice comes under the purview of the Ministry of Finance.

Get sufficient information before deciding

As in all data, before making any selling or purchase decision, remember that you need to get specific on the location and type of property that you are considering. And get specific data of the area or type of property within the area of focus. While some locations may experience price falls, others are on the upward trend. Also note that the Stamp Duty Savings for First Time Home Buyers includes both new projects and in the secondary market. Remember, only make purchase decisions when both need and ability has been established.

Ms. Chan Ai Cheng
Malaysian Institute of Estate Agents

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