In Q1 2023, Malaysia’s economy reported a 5.6% YoY growth rate, identical to the growth rate in the same period of the previous year. Driving this growth was the Services sector, bolstered by the rebound in tourism, a thriving real estate market, and improving business services. Additional support came from robust private consumption, underpinned by the ongoing economic growth.
Despite a somewhat uncertain international economic climate, Bank Negara Malaysia (BNM) reaffirms its projected Gross Domestic Product Growth to be within the 4.0% to 5.0% range, as confirmed by the BNM governor.
On another note, home financing costs have seen a slight rise. The Monetary Policy Committee raised the Overnight Policy Rate (OPR) by 25 basis points to 3.00% in May 2023. While the increase is marginal, it implies an additional financing burden for homeowners.
We predict uneven growth in home prices and housing demand due to varying market forces. States with a strong retail or tourism sector presence may experience more substantial price growth. Conversely, states dependent on commodity segments may witness less growth in home prices due to adverse weather conditions and lower commodity prices.
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Report Highlights
- Get The GuruView
- Malaysia Property Sale Market Index
- Top 10 Areas That Saw the Highest Increase in Interest
- Malaysia Property Rental Market Index
- Conclusion
Get The GuruView
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Malaysia Property Sale Market Index
Proxied by the Sale Price Index, home asking prices experienced a 2.1% increase QoQ in Q2 2023, bolstering the 1.6% QoQ growth of Q1 2023. As the cost of replacement homes escalates, sellers are cautiously hiking up prices. Elevated asking prices are, in turn, coaxing homeowners to list their properties, as evidenced by an 8.3% QoQ uptick in the Sale Supply Index. As of now, this index has reached a peak unseen since 2018.
Conversely, swelling asking prices and interest rates are catalysing hesitations in purchasing decisions. Q2 2023 marked the fourth successive quarter of decline for the Sale Demand Index, plummeting 10.2% QoQ. This unyielding downward shift also mirrors property seekers’ unease regarding the economic landscape. However, we anticipate fluctuations in the market, given the unique economic influences in each geographical region.
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Top 10 Areas That Saw the Highest Increase in Interest
In the second quarter, data indicates a noticeable increase in enquiries in Cheras, Kuala Lumpur. Factors contributing to this trend include a mature population, optimal accessibility, and comprehensive amenities.
Completed developments in Q2 2023, such as Aster Residence, Trion @ KL, and M Vertica, are strategically situated near main roads and highways. Additionally, Pandan Indah, positioned between Ampang and Cheras, predominantly features residential properties in the affordable to mid-range price bracket.
Permas Jaya, Johor also witnessed a positive increase in interest in its property market. Factors such as increased taxes and rising rental fees in Singapore seem to be driving property buyers to this area.
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To see most viewed condominium and landed projects, download the full report:
Malaysia Property Rental Market Index
In Q2 2023, the Rental Demand Index experienced a more pronounced decline of 11.3% QoQ, marking the third consecutive quarter of decreased inquiries. The easing of demand is attributed to the persistent rise in asking rents, as indicated by the 4.9% QoQ increase in the Rental Price Index during the same period. As a result, a growing number of tenants are being priced out of the market.
Concurrently, the Rental Supply Index witnessed a 13.1% surge, indicating a rise in property owners leasing out their properties. This increased supply coupled with falling demand is likely to exert further downward pressure on rents. However, landlords’ expectations may remain optimistic, buoyed by the recovery of the retail and hospitality sectors.
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Conclusion
The real estate market is currently undergoing a curious trend where both sales and rental demand for homes are declining, even as asking prices and rents continue to escalate. Simultaneously, the number of property listings is also growing, resulting in a widening gap between seekers and sellers in the property market.
In the current scenario, housing affordability is likely to become a pressing issue. The combination of diminishing demand and rising asking prices and rents can potentially exacerbate the problem of housing affordability. Future buyers and renters may find it increasingly challenging to find affordable homes, creating a potential barrier to home ownership and rental, especially for first-time buyers or those with limited income.
Therefore, it’s essential for relevant stakeholders – from policymakers to developers and financial institutions – to carefully monitor these trends and devise appropriate strategies. These could range from introducing more affordable housing projects to implementing flexible financing schemes.
The stamp duty exemptions and discounts for homebuyers under the revised Budget 2023, as well as more inclusive stamp duty discounts for transfer by way of love and affection, shows the Malaysia MADANI government’s efforts in ensuring the dream of home ownership remains accessible to all.
Read the full PropertyGuru Malaysia Property Market Report Q3 2023:
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If you’re interested in more property insights, check out our prior Property Market Reports
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