PETALING JAYA: Home prices are expected to climb 3% over the 12 months ahead and then surge by 12% in the following 12 months, according to a Juwai IQI’s agent survey “Property Survey and Index Malaysia Q3 2021”.
“The outlook of real estate agents across Malaysia continues to improve. A year ago, agents forecast significant declines in both home prices and rents. Today, they expect modest growth in prices and rents over the next four quarters,” the survey said.
Rents over the coming 12 months will be flat with just 1% growth and will then bounce up to 8% growth from the third quarter of 2022.
Agents’ current sentiment shows a significant improvement from about one year ago in 2020, when we last surveyed them. At that time, the outlook was entirely negative, with agents projecting a 5% fall in home prices and a 4% decline in rents.
“By January 2022, we believe the market will have turned the corner, transactions will rebound, and prices in specific segments will firm up and even increase. The survey reveals that the outlook of real estate agents across Malaysia has continued to improve. A year ago, agents only forecast doom,“ said Juwai IQI group co-founder and CEO Kashif Ansari.
At 35%, first-time buyers account for a larger share of new home transactions than at any time on record. They have found support in government stimulus policies and their increased savings due to their lower overall spending.
First-time buyers account for at least one-third of new home purchases in nearly every state. They have the highest market share in Johor and Sabah, accounting for 42% and 39% of transactions. Other states with strong first-time buyer activity include Penang, where 37% of new home sales go to first-time buyers. In Kuala Lumpur and Selangor, they account for 35% of new home purchases.
Local investors’ and upgrading buyers’ market share is little changed, at 26% of transactions in a new home market.
Foreign buyers have fallen to the lowest share of the new development market on record, with just 13% of new home purchases. Foreign buying activity will likely not rebound significantly until the borders reopen.
Foreign (new development) buying has hit particular lows in Johor at just 8% of all transactions. In Sabah, one of every 10 transactions involves a foreign buyer. The states where foreign buyers make up the highest share of transactions are Perak, where they account for 18% of new home sales, Sarawak at 15% and Kuala Lumpur and Selangor, where foreign buyers account for 13% of all new home purchases.
For the new homes market, first-time buyers have seen their share of the subsale market rise to its highest level on record and higher than that of any other buyer group. First-time buyers account for 31% of all subsale transactions.
In the subsale market, first-time buyers have the largest share of transactions in Johor, where they account for two out of every five purchases. They account for 34% of transactions in Sabah and 32% in Sarawak. The state where first-time local buyers have the smallest share of the subsale market is Perak, accounting for 26% of transactions.
The subsale market shares of local upgrade buyers and local investors are little changed, at 29% and 27%, respectively. Over the past two years, the market shares of local upgrade buyers and local investors have been stable. During the same time, first-time buyers have gained six percentage points of market share, and foreign buyers have lost seven percentage points of market share.
First-time buyers have surged to take the largest share of new home and subsale transactions so far in 2021.
Agents expect first-time buyers to continue their strong performance and account for more transaction growth than any other buyer group. 56% of agents believe first time buyers will complete more transactions in the remainder of the year than in the prior quarter.
First-time buyer growth is likely to be especially strong in Penang and Perak, with three-quarters of agents in those states projecting first-time buyers will increase their pace of transactions in the remainder of the year.
In comparison to first-time buyers, the forecast for the other buyer groups is weak. Just 41% of agents expect local upgrade buyers to increase their pace of transactions in the remainder of the year. That is six percentage points lower than in the prior survey at the same time in 2020.
Just 35% of agents expect local investors to increase their pace of transactions, down 19 percentage points from the last survey. Today, only 14% of agents expect foreign buyers to increase their transactions in the remainder of the year, down from ⅓ in the prior survey.
Juwai IQI conducted the survey online in May and June 2021. A total of 397 Malaysian real estate agent panellists participated in the survey.
