PETALING JAYA: The Covid-19 pandemic and all the problems that came with it correlate with significant home price gains in three out of four of the world’s top cities – Kuala Lumpur is ranked 15th in price gains, with the median asking price climbing by 5.9% to US$421,000 (RM1.8 million) in July 2021.
According to Juwai IQI’s report “Pandemic Home Prices Boom in Three-Quarters of Global Cities Q3 2021”, Kuala Lumpur is also the ninth-ranked city with buyers from China.
Juwai IQI group co-founder and CEO Kashif Ansari said however, activity is reduced, and transactions were down 12% in the first quarter of 2021.
“We are optimistic about the medium term. Four out of five residents of KL already have received at least one dose of the Covid vaccine. As the vaccination campaign proceeds, so will the economy and real estate activity.
“Malaysia is not the only country struck hard by the pandemic, but we will get back to health and economic growth. With an emphasis on digital technologies, the social safety net and global trade, the economy will turn the corner in Q4 and begin to bounce back in 2022.”
The pandemic is undoubtedly both a tragedy and manifold crisis, but for those who own residential property, it has also been a financial boon.
“When you compare home prices in the first quarter of 2020 to the latest 2021 data, you can only conclude one thing. For all its tragedy, the pandemic has been good for home prices. Prices are higher in three out of four of the world’s top cities that we looked at.”
He said one reason prices are higher is because the pandemic stimulated a tremendous response from governments and central banks. Up till now, government bailouts have reached US$17 trillion – and likely to increase in the next six months. Low interest rates have pushed the prices of assets higher, including real estate.
“The asset inflation is one reason we consider it vital for more Malaysians to own their own home. Only those who own a home have benefitted from the price gains. If you are renting, you are missing out.
In the report, Juwai IQI evaluated the evolution of residential real estate prices in an environment of global pandemic, economic disruption, geopolitical tension and travel restrictions. The report looked at 21 global markets and 17 had significant positive changes in prices.
Covid altered many markets and stimulated new demand trends as buyers reevaluated their living situation and sought property that meets their new needs. Typically, this meant more space for both indoors and out. This shift in preferences combined with other factors contributed to higher demand for residential real estate. The additional factors include inexpensive financing, wealth effect due to higher asset prices, increased savings and reduced non-housing spending.
