Malaysia residential property market recovery in 2014

Has the Malaysian property market stopped its downtrend? It does seem so when we look at the transaction numbers for 2014 versus the years before. My good friend, Michael Geh, the senior partner of Raine & Horne International Zaki + Partners Sdn Bhd’s forwarded to me the numbers compiled by NAPIC. Please refer to the chart below. In 2010, the total number of transactions was 226,874 units and it rose to 269,789 in 2011 and in 2012 it went up to 272,669. In 2013, this went down by 26,444 units. I think everyone expected 2014 to have been a year of even low transactions. This did not happen and in fact the number of transacted units went up very slightly, by 1,026 or a marginal 0.4% up. Is this a sign of recovery?

Okay, perhaps recovery might be a little far-fetched but what about this being a sign that the downtrend has now stopped? I think this may be happening. In fact based on some comments from some agents, there were some buyers who were so worried about GST that they rushed to buy some units. Recently, there were even reports about millennials being so worried that they could be priced out of the market with GST that they were borrowing money just to buy their first property! Read more here: Using ‘bad debts’ to buy ‘good debts’? Fortunately I do not think this number is huge because property remains the single largest purchase ever in everyone’s lives and not many are willing to rush and risk everything. Even my close friend failed to buy one in time and he told me about it regretfully just last week. However he agreed that prices did not change thus far for the few projects that he has viewed before GST and after GST. My comments about GST and property? Read here: GST for new properties. Higher than 3%? Try it and see.
In terms of total value for the transactions for 2013 vs 2014? It has increased from RM72.06 Billion to RM82.06 billion. This is an increase of RM10 billion or a whopping 13.9 percent. This meant that the average transacted property price in 2013 which was RM292,659 to RM331,890! Yes, the average price of the transacted properties in 2014 vs 2013 has shown a huge jump!
Diving deeper, let’s look into the primary versus the secondary market. Please refer to the chart here:

It’s very clear that the real cause for the increase in the average price is because of the value of transactions in the primary market. The total transacted units in the primary market showed an increase of 30.56% or 12,587 units. In terms of actual average value of these units, it has an average of RM389,386. This is nearly 18% higher than the overall value of all transactions. Meanwhile, the average value for overall transacted SECONDARY unit is RM315,908 in 2014. This is an increase of 7.9% from 2013. I seriously would like to encourage everyone to be serious about the secondary market. Just look at the difference in pricing between the primary vs the secondary. There are really good bargains to be found versus primary, especially if you are looking at your first property. Nevertheless, the prices of these secondary units are on an uptrend every year. Do refer to the chart which clearly showed that transactions may be down but the value of transactions are always higher year after year. I think major reason is because there is still gap between primary and secondary properties thus the secondary ones can still grow especially when primary properties are still becoming more expensive.
Seriously, there is still no sign that recovery has started on an overall Malaysian property market basis. Perhaps some market has shown improvement but some may have shown a more negative year. This is especially for 2015 because it may be affected by the frenzy of buying to beat the Goods and Services Tax (GST) as well as the slower buying after GST in anticipation that everyone would be slowing down as well. Haha. It’s always funny when the whole market always seem to swim in the same direction. Why NOT swim in the opposite direction and look for opportunities instead of anticipating the same situation year after year? You decide.
written on 25 Apr 2015
next suggested article: Better sentiment or better pricing and higher transactions.