PropertyGuru Malaysia: Property prices decline 2.5 per cent

KUCHING: The PropertyGuru Market Index ( PMI) shows that asking prices of homes in Malaysia continue to drop nationwide as well as the key property epicentres of Kuala Lumpur, Selangor, Johor and Penang.

The downward trend is reflected in both quarterly and annual price movements despite improved consumer sentiment of 42 per cent and 53 per cent of Malaysians wishing to buy a home by the end of 2018.

In the third quarter of 2018 (3Q18), the PMI showed that asking prices by real estate developers and individual owners nationwide had dipped by 1.8 per cent from the preceding quarter. Year on year, prices show a 2.5 per cent drop.

Notably, amidst oversupply of properties and new market supply, properties in certain market segments and certain locations are coming under increased pressure with sellers continuing to discount prices to secure buyers.

“Others may be opting to sell as rental rates also come under pressure due to the ample choice available in key areas. With more supply, one can drop rental rates but if that is not feasible, the usual option is to sell to unlock the gains,” PropertyGuru Malaysia Country manager Sheldon Fernandez highlighted.

Additionally, the present downward price trend may not be due to sellers reducing prices, but also in overall value provided to reduce ownership cost.

“Beyond absolute pricing, there are other factors also such as developers throwing in freebies such as furnishing and décor, carparks, or even rebates. Cumulatively, these incentives, reduce the overall cost of ownership which will have a knockdown effect on prices,” Fernandez added.

Similar to the national trend, all key property epicentres in 3Q18, recorded a quarterly decrease. Kuala Lumpur saw the largest drop by 3.2 per cent from the previous quarter, followed by Johor at 3.3 per cent, Selangor at 1.8 per cent and Penang at 1.3 per cent.

Johor has been on an upward trend experiencing an upward capital appreciation in the market from 4Q16 till 2Q18 until a slight Year- on-Year dip of 2.3 per cent was recorded in 3Q18.

On an annual basis, Selangor recorded the highest yearly decrement with 2.4 per cent, followed by Johor at 2.3 per cent, Penang at 0.7 per cent and Kuala Lumpur at 0.5 per cent.

With the exception of Johor, all regional markets continue to show a discount to their 2015 base prices. Johor continues to maintain an upwards trend-line, but it remains to be seen if the trend will persist going into 4Q18 and 2019.

While Fernandez cited that 2018 remains largely a buyer’s market for property, he also cautioned against thinking that this applies to all properties being sold in all areas.

He mentioned that even locations that may presently experience a price drop, may rebound after completion of the MRT2 or the LRT3 rail lines or other infrastructure projects.

“While the sentiments of Malaysians towards the property market have improved considerably, it appears that asking prices have yet to catch up with this improving sentiment. But the market usually corrects itself going forward. For now, the continued price correction is good for the market in the long-term.

“Moving forward, we will monitor how property prices perform due to the impact of SST exemption on properties. We can all look forward to our next PMI Report release for 4Q18,” Fernandez added.