Malaysian residential real estate market headed for rally in next 12 months

PETALING JAYA: Residential real estate market in Malaysia is headed for a post-pandemic rally over the next 12 months, according to Juwai IQI Malaysia Property Survey and Index Q3’22.

Juwai IQI co-founder and group CEO Kashif Ansari (pix) said real estate agents around Malaysia told the group that prices and rents are likely to increase significantly over the next 12 months.

“If they are right then we should expect a significant increase in activity. In that scenario, people who own their own homes will benefit from the increasing values, while those who rent or are seeking to buy will have to continue to raise their budgets,” said Kashif in a statement today.

Whether agents advise you to buy or rent is a strong indicator of their outlook for the market. Nearly nine out of 10 surveyed Malaysian real estate agents said they would advise a friend that it is better to buy today than to rent. By contrast, only 11% said that they would advise a friend that it is better to rent today than to buy.

“Agents expect renters to face rate increases over the next 12 months and for home prices to correspondingly rise. Those who buy now would be spared from these pressures. When you look at who has the biggest opportunity here, you see that slightly more than one-third of Malaysians aged 20 to 39 are renters. That's the highest percentage of renters of any age group,” remarked Kashif.

The real estate industry expects significant residential price growth over the next 24 months. Agents believe that residential prices will climb nationally by 11.8% over the next 12 months. The growth will continue the following year come up with prices ending up 16.5% higher over the next 24 months.

“In Penang, agents predict 17% price growth in two years. Agents in Johor forecast 18.1% price growth in the same period. Kuala Lumpur and Selangor agents anticipate 15.9% price growth, and agents in Sabah expect price growth of 14.7% over the next two years.

“One reason that agents are so bullish on the real estate market is that they are overwhelmingly optimistic about the economy. Forty-five per cent of agents believe the economy will be somewhat stronger or much stronger during the next six months,” he added.

The big winners in the competition for new homes are first-time buyers. Since the beginning of the pandemic in early 2020, first-time local buyers have increased their share of new development project purchases.

“During the pandemic, first-time buyers increased their share from around 30% to about 35% of new development transactions. Meanwhile, both investors and buyers who were upgrading from one home to another lost about 1% of their new development market share,” he said.