Local property market to remain bearish for a while yet: PropertyGuru

14 Nov 2019 / 18:16 H.

PETALING JAYA: The bearish sentiment in the local property market is expected to persist in the short and long term, according to the PropertyGuru Market Index Q3 report.

The index declined 0.9% year on year and 1.2% quarter on quarter.

PropertyGuru noted that property owners and sellers are adjusting their asking prices downwards as the national Home Ownership Campaign (HOC) draws to a close.

Penang saw the steepest quarter-on-quarter decline in asking prices, with its price index down 1.5% from 94.8 to 93.4 in Q319. The decrease follows consistent growth since Q318, with its PMI peaking in the first quarter this year at 94.8 points.

“As with other markets in Malaysia, the long-term trendline for Penang exhibits a marked decline, pointing towards a buyer’s market moving forward. This is reflected in a year-on-year decrease in its PMI of 0.6% in the third quarter this year, with sellers adopting defensive positions in response.

“Continued increase in supply was seen in Q319 at 22%, a positive turn compared to the previous quarters in 2018, demonstrating that sellers evidently want to let go of their properties, but are still adopting a wait-and-see approach,” said PropertyGuru Malaysia country manager Sheldon Fernandez.

The Kuala Lumpur market exhibited a trend similar to Penang’s, with asking prices falling 0.9% in the third quarter of this year, following a brief spike in the second quarter.

“There is still a large portion of mismatched Kuala Lumpur properties in the market, and properties in the affordable range are still widely in demand, especially with a highly desired address like KL. It remains to be seen how Budget 2020’s revised foreign ownership guidelines will impact these mismatched units,” said Fernandez.

Sellers in Selangor also adjusted asking prices 0.8% downwards in Q319, with its PMI falling from 91.9 to 91.1.

Johor, however, was an exception with marginal year-on-year growth of 0.3% and sideways quarter-on-quarter movement in Q319.

According to the report, Johor realised investments worth RM172.2 billion in the first half of the year, 39% of which comprised foreign direct investment, a sign that the state’s strong price and transaction momentum is likely to continue into the near future.

“Supply volumes, which stood at a 118% increase in Q219, maintained an excellent trajectory this quarter with 119% growth, indicating that the state’s properties are experiencing good take-up rates thanks to the demand from both locals and foreigners, thus allowing prices to readjust,” said Fernandez.

Looking ahead, he said while the ringgit has strengthened following positive undertones in recent US-China trade talks, and interest rate environments in general have improved following rate cuts by Bank Negara Malaysia and the US Federal Reserve, the conclusion of the HOC, continued application of revised real property gains tax rates and absence of strong driving provisions for property in the recent Budget spell out a leaner year for property ahead.

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