Based on the Property Market Report – H1 2020 (NAPIC), the pace of improvement will depend on both domestic and external factors such as political stability, global oil and commodity prices as well as further developments related to the COVID-19 pandemic.
Behind the Property Market Activity
1.The property market performance recorded a sharp decline in H1 2020: H1 2019.
2. The property sector recorded 115,476 transactions worth RM46.94 billion in H1 2020.
3. The residential sub-sector led the overall property market with 65.2% contribution, over 54.6% share.
How is the Residential Property?
4. There were 75,318 transactions worth RM25.61 billion recorded in H1 2020, declining 24.6% in volume and 26.1% in value – with the residential overhang continuing to increase.
5. Selangor contributed the highest volume and value to the national market share, with 22.8% in volume (17,178 transactions) and 32.9% in value (RM8.44 billion).
6. Sales performance was poor at 3.3%, considerably lower compared to H1 2019 (30.9%) and H2 2019 (28.4%) – due to the Movement Control Order period.
How is Commercial Property situation?
7. There were 8,118 transactions worth RM8.51 billion recorded, declining by 37.4% in volume and 33.2% in value (H1 2019: 12,962 transactions worth RM12.75 billion).
8. Performance across the states slumped as all states recorded significant declines in market activity;
- Selangor (1,870 transactions worth RM2.4 billion)
- Kuala Lumpur (1,212 transactions worth RM2.09 billion)
9. The overall performance of purpose-built offices remained stable at 80.6% in the review period (H2 2019: 80.6%).
- WP Kuala Lumpur and Pulau Pinang secured higher occupancy rates at 75.8% and 78.6% respectively.
- Selangor and Johor logged in lower than the national rate at 69.8% and 65.0% each.
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What is the NAPIC Outlook for 2020?
10. The NAPIC H1 2020 reporting recorded a sharp decline in the first half of 2020 (H1 2020), in consonance with the Malaysian economic performance, which contracted by 17.1% in Q2 2020 (Q1 2020: 0.7%).
11. According to Bank Negara Malaysia, the Malaysian economy is expected to recover gradually in H2 2020 as the economy progressively re-opens and external demand improves – projected to experience negative growth within the range of -3.5% to -5.5% in 2020.
12. Further assistance from the government such as;
- Short-term Economic Recovery Plan or PENJANA
- Reintroduction of the Home Ownership Campaign (HOC)
- Real Property Gains Tax (RPGT) exemption
- The relaxation of the current 70% financing margin limit for third housing loan onwards
How is Property Market of Q3 is holding up?
Despite the uncertainty of the economy, the volume of units sold has risen up to 6,160 – from 89,270 from 83,085.
Yet, we have to bear in mind the transaction of Q3 has dropped slightly as many units have been offered discounts to discourage the property overhang situation.
Conclusion?
Despite the cautious optimism towards the nation’s projected gradual economic recovery, with the resumption of market activity under the Recovery Movement Control Order (RMCO) – the report presented by NAPIC shows the property market is more than likely to remain soft for the remaining half of 2020.
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