MIDF Amanah Investment Bank Bhd Research (MIDF Research) expects property sales in Malaysia to decline over the course of 2021. It said that buyers’ sentiment will be reduced due to economic decline. This decline will be likely to be traced to the reinstatement of the Movement Control Order (MCO) and Conditional Movement Control Order (CMCO) after a recent spike in Covid-19 cases across the country.
Speaking to The Malaysian Reserve, MIDF Research analyst Jessica Low Jze Tieng said that concern over property supply would have an adverse impact on buyer sentiment. This would be exacerbated by the pandemic’s effects on the sector’s recovery.
“Data from the National Property Information Centre (Napic) shows unsold completed residential units in Malaysia increased 6.6% in the second quarter of 2020 (2Q20) to 31,661 units after posting four consecutive declines from 2Q19 to 1Q20. Hence, we are having a ‘Neutral’ call on the property sector,” she said.
Low also stated that many developers experienced a sales reduction during the first nine months of 2020. This was the case as a result of the original MCO which was imposed in March. However, the government took steps to mitigate this issue by instituting the Home Ownership Campaign (HOC) 2020 which provides various incentives.
The HOC period lasts from June 2020 to May 2021. During this period, the first RM1 million of a property’s value on the memorandum of transfer for properties priced from RM300,000 to RM2.5 million receives a stamp duty exemption. There is also a complete stamp duty exemption for the financing agreement.
The implementation of the HOC has borne tangible results. Sales increased during the latter half of 2020 due to its incentives.
“The pick-up in property sales could also be attributed to the record low-interest rate. Overall, I would say the incentives given by the government helped boost buyer sentiment and cushioned the negative impact of lower sales during the MCO,” Low said.
The HOC is one of the short-term schemes comprising the government’s National Economic Recovery Plan. The others include Real Property Gains Tax exemption for the disposal of up to three properties as well as the lifting of a 70% margin of financing limit for the third housing loan onwards.
CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen said that the reduction of interest rates and reintroduction of the HOC improved property sales in 2020.
“Without these incentives, the sales could have been considerably lower. These incentives encouraged the least affected prospective buyers to buy their first property or to upgrade their existing residences,” he said.
Chan believes that the government will continue doling out incentives and economic stimulus packages throughout the remainder of this year. He expects this to be the case until the economy makes a full recovery because these measures would sustain the property market’s performance and make up for the property sales reduction.
“Barring any unforeseen circumstances, the overall property market is expected to remain largely stable or reduce marginally. The real recovery will only take place when the Covid-19 outbreak is fully contained,” Chan said.
Malaysian Institute of Estate Agents president-elect Chan Ai Cheng said that according to Napic, 2Q20 saw far fewer transactions than did. 1Q20.
“Certainly, it is more challenging to transact secondary (subsale) properties when you can’t conduct viewings, and back then most of us agents were not prepared to conduct virtual viewings compared to now. The MCO taught us many things and one of which is the importance of good photos, videos, and 360° photos (and) videos of the properties to allow for virtual viewings and digitalizing our business,” she said to The Malaysian Reserve.
Chan noted that Covid-19 harmed economic activity, market confidence, and job stability in the property market.
“All of the stimulus packages for the property sector have helped to stabilize this sector, especially for new projects with the HOC stamp duty exemption,” Chan said.
Chan expects the market to greatly recover in 2021 as the digitalizing of business continues.
“Work from home culture will stay in 2021. (We will possibly) see the repurposing of the usage of properties,” she added.