House prices down in 2Q, Penang residential market picking up pace

 

PETALING JAYA: House prices in Malaysia fell in the second quarter of 2022 (2Q22), marking the worst quarterly contraction since the start of the Covid-19 pandemic.

This occurred as new launches of residential units and sales performance for new launches softened in the first half of this year.

Based on the data by the National Property Information Centre (Napic), the Malaysian House Price Index (MHPI) in 2Q22 decreased by 1.2% compared with the 1Q.

The average house price for 2Q22 was RM439,084. In 1Q22, it was RM444,230.

Napic noted however the MHPI rose marginally by 0.5% on a year-on-year (y-o-y) basis in 2Q22, adding house prices continued “its low pace growth”.

For comparison, the index had increased by 2.4% y-o-y in the 1Q22.

Commenting on the domestic property market performance, Napic said it recorded a rebound in the first half of 2022 (1H22), a reflection of normalising economic activities as the country moved to endemicity.

More than 188,000 transactions worth RM84.4bil were recorded in 1H22, showing an increase of more than 30% in volume and value compared to the same period last year, as all property sectors recorded y-o-y growth.

“The residential property sector recorded 116,178 transactions worth RM45.62bil in the review period, increasing by 26.3% in volume and 32.2% in value y-o-y.

“The four major states namely Penang, Kuala Lumpur, Johor and Selangor formed about 47% of the total national residential volume.

“Commercial property segment recorded 15,169 transactions worth RM14.02bil, up by 45.4% in volume and 28.3% in value compared to the same period last year.

“Selangor contributed the highest volume and value to the national market share, with 26.5% in volume (4,025 transactions) and 33.5% in value (RM4.7bil),” Napic said in a statement yesterday.

Napic also reported that more than 10,000 units of newly launched residences were recorded in 1H22, down by 66.7% y-o-y. Against 2H21, the new launches were lower by 13.3%.

Terraced houses dominated the new launches, contributing 68.2% of the total units, according to Napic.

The sales performance for new launches in 1H22 was recorded at 20.3%, slightly lower compared with 20.6% in 1H21 and 28.1% in 2H21.

On property overhang, Napic said the situation had improved amid the market recovery.

“A total of 34,092 overhang units worth RM21.73bil was recorded, down by 7.5% and 4.6% in volume and value respectively against 2H21. Most of the overhang is in Johor with 6,040 units worth RM4.73bil.

“The serviced apartment sub-sector recorded 22,674 overhang units with a value of RM19.32bil, indicating a decrease of 6.7% and 5.6% in volume and value respectively against 2H21,” it said.

Napic said the property market is likely to “strive in the coming months”.

“With the positive projection on economic growth by Bank Negara, expected between 5.3% and 6.3% in 2022, supported by the implementation of various government initiatives and assistance, the property market performance is expected to be on track,” it said 

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RCEP to boost our property market

RCEP will promote and facilitate international trade among the 15 participating countries in the Asia-Pacific region and the expected increase in free trade will have a significant impact on the Malaysian property market. -NST/file pic.

The signing of the Regional Comprehensive Economic Partnership (RCEP) signifies the world's largest trade agreement and will contribute towards sustaining Malaysia as a preferred trading hub and investment destination.

RCEP will promote and facilitate international trade among the 15 participating countries in the Asia-Pacific region and the expected increase in free trade will have a significant impact on the Malaysian property market.

Higher trade and economic activities will impact on the occupation, investment and development sectors of the property market. Real estate space is a local input in the production and supply of goods and services. Increased exports lead to the expansion of domestic production.

Increased domestic production increases the demand for industrial space. Imports also have an impact on demand for real estate space. Goods imported need to be stored and distributed through warehouses and logistic properties.

These goods are then displayed and marketed at various outlets points thereby increasing the demand for retail spaces in retail malls.

Regional trading bloc and trade liberalisation will encourage foreign direct investments (FDI). These FDIs will create demand for industrial land and buildings. New capital investments will spur demand for more financing activities from the banks.

Once the plants and machines are in operations, it will create employment and demand on other factors of production. Higher economic growth will drive the capital market which will attract more foreign investment fund flows investing into local equities.

With increased economic activities, occupation demand for real estate space will cause rental increase. With inelastic new supply, potential future rental growth and prospective capital appreciation, investors will start to invest in real estate leading to an active investment market with the more participation from the institutional investors.

Developers will react to prevailing rents and capital values when they appear to signal a profitable opportunity. If prices rise, more developers will respond to these signals, the aggregate flow of supply into the market increases.

These new spaces will meet the requirements of the occupiers and investors e.g. floor plate size, specification and network connectivity requirements

Real estate service providers such as property consultants played an important role in the whole process by aligning their service standards to the requirements of the regional and global clients.

It is envisioned that the RCEP will open up markets and help in the recovery post Covid-19 pandemic. With increased economic activities, it will give rise to more derived demand for various real estate spaces thereby leading to an improved property market performance in the future.

DR. TING KIEN HWA

Professor of Property Investment

Centre of Real Estate Studies

Faculty of Architecture, Planning & Surveying

Universiti Teknologi MARA

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