Press Release: National Residential Property Prices to Recover from Coronavirus, Climb 8.6% by 2021: Industry survey by Juwai IQI

National residential property prices will stall this year with just a 1.1% rise before climbing again next year to 8.6% above current levels by 2021, according to a new nationwide survey of the real estate industry by Juwai IQI. Meanwhile, at least one agent has sold seven new apartments to buyers online, sight unseen.

Juwai IQI conducted its “Q1 2020 Property Index and Survey – Malaysia” from 7 February to 18 March 2020, More than 340 Malaysian real estate agents from across the country participated. The Property Index and Survey tracks the evolution of industry expectations for prices, rentals, and market activity and first launched in Q4 2019.

The Q1 2020 Property Index and Survey also revealed: 

  • When it comes to residential rental rates, agents predict an average 1.7% increase through the end of 2020 and an increase of 7.1% by January 2022. 
  • First-time buyers made 30% of nationwide new home sales transactions in Q4 2019 — significantly more than any other buyer group. The subsale or secondary home market in Q4 2019 was led by first-time local buyers and local upgrade buyers. The two groups each accounted for 27% of subsale purchases in the period. 
  • When it comes to predictions of transaction growth during the remainder of 2020, 61% of agents expect first-time local buyers to conduct more transactions in 2020 than in 2019, and 55% of agents expect foreign buyers to conduct more transactions in 2020 than in 2019. 
  • With the impact of the Coronavirus epidemic on the market, Malaysia will see greater use of online tools to facilitate the marketing, research, and purchasing of real estate. Some of these tools, such as virtual reality, 3D rendering, and livestreaming, are already available but will be used much more widely than in the past. 

Agent Sells 7 Klang Valley Units Online 
Despite the quarantine, IQI real estate agent Joel Low believes buyers in Malaysia still want to purchase property in Kuala Lumpur and Selangor. 

Low said, “We used digital platforms to showcase the latest property developments around the Klang Valley. At an online private preview last week, buyers purchased seven properties, priced from RM300,000 onwards. The buyers never visited the properties in person.

“These investors are looking for good cash-flow generating investments. Property developers such as Exsim are offering attractive promotions on new developments, making this an opportunity the buyers felt was too good to pass up.”

Kashif Ansari, Group Executive Director of Juwai IQI, said:
“The number of transactions is down due to the movement control order, which is freezing prices in place. The industry is optimistic however about a post-pandemic recovery and expect residential prices to rise by 8.6% by 2021.

“Amidst all the uncertainty, property is viewed as a relatively safe investment that can provide cash flow. Bank Negara Malaysia’s moratorium on the payment of interest and principal for credit facilities has provided some relief to property owners. The Bank’s move has helped reduce possible pressure on the real estate market. It is one factor in the positive forecast for 2020.”

Rental Rates Growth to Restart in 2020
The survey also revealed that agents nationwide predict an average 1.7% increase in residential rental yields through the end of 2020. 

Ansari said, “The findings showed that Sarawak has the highest forecast rental growth at 5.4% in 2020. Penang has the most negative forecast, with rental rates there expected to fall by 5.8% in 2020. But looking forward two years, agents are more confident about rental rates. Nationwide, agents expect rental rates to climb by 7.1% by January 2022.” 

Sarawak and Kuala Lumpur and Selangor have the strongest two-year forecast for rental rates. In both submarkets, agents forecast that rents will climb by 7.9% through the end of 2021. Penang has the weakest forecast, with rental rates expected to climb 3.8% through 2021. 

More First Time Buyers
Ansari said, “When it comes to nationwide new home sales, first-time buyers made 30% of the transactions in Q4 2019. That is 5 points to 9 points greater than any other by a group. Local investors made 25% of nationwide transactions, local upgrade buyers made 24% of transactions, and foreign buyers made 21% of transactions.”

The findings showed that local buyers accounted for the greatest share of new home sales in Penang, were they accounted for 37% of purchases. In Kuala Lumpur and Selangor, they accounted for 32% of transactions.  

The state where foreign buyers accounted for their greatest share of new home purchases was Johor. In Johor, foreign buyers purchased one of every four new homes sold. 

First-time local buyers and local upgrade buyers lead the subsale or secondary home market in Q4 2019. The two groups each accounted for 27% of subsale purchases in the fourth quarter of 2019. Local investors were close behind at 26%. Foreign buyers made 21% of nationwide sub sale purchases. 

Outlook and Forecast
Ansari said, “Malaysia’s real estate remains attractive to foreign buyers due to its strategic location. Its close proximity to countries such as Japan, China, Hong Kong and Singapore, which are the world’s largest cross-border property buyers, makes it even more appealing.

“For investors and first time home buyers, now is definitely a good time to consider getting into the market, as there are attractive discounts offered by developers.”

 — End of Press Release —

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