Malaysian Real Estate Market Outlook in 2022

The perpetual lockdowns and movement restrictions have caused the property market to stagnate during mid 2020 towards late 2021. Despite a stark decline in transactional activities during the first half of 2021, supply continues to grow as the real estate sector remains robust with the construction industry achieving sustained growth. Moreover, with the current upward price trend, the property is set to bounce back in early 2022.

The emphatic success of the National Recovery Plan has brought about greater growth with the reopening of more economies in sync with increasing vaccination rates with the National Vaccination Programme in overdrive mode. The positive economic recovery is largely strengthened by an increase in global trade, commodity prices as well as business and consumer sentiments. The various stimulus packages introduced by the government continue to support social and economic activities in revitalising the livelihoods of citizens. With greater financial security, property purchasing becomes a norm. Key prerequisites in reviving the property market are no doubt job security and consumer confidence.

Amid economic uncertainties throughout the pandemic, asking prices for Malaysian property has seen a steady increase which is a positive sign of market resilience. National price indices clearly suggest transactional activities continue to transpire with median prices continuing to rise. Demand for high-end properties remains robust especially for those with solid finances and deep pockets. With low interest rates and property prices as well as rich incentives offer an opportunity to enter the marketplace with much confidence. Aided by greater acceptance in the digital economy by the real estate industry, long-term prospects for capital appreciation are brighter than ever. Now is definitely a good time to invest in real estate and to purchase a property that has long eluded homebuyers for so long.

In spite of issues plaguing the real estate market with regards to the mismatch in property pricing, demand has always remained strong and sturdy. With the proliferation of affordable houses and low-entry priced residences, the revival of homeownership in Malaysia has gotten buyers and investors rather excited in owning their dream property. The recent national Budget 2022 announcement also saw the abolishment of the long-time RPGT (real gains property tax) on homes that are sold from sixth year onwards. This relaxing of rules pertaining to property transaction helps homeowners offload their unwanted properties without hassle in favour of potential homebuyers and property investors.

The government’s RM2 billion Guaranteed Credit Housing Scheme aims to assist workers in the gig economy and also alleviate the financial burden of home loan applicants. There is however no news to date on the possible extension to the Homeownership Campaign (HOC) 2021. Malaysia My Second Home Programme (MM2H) plays a critical role in reviving the housing industry by addressing the huge number of unsold high-end properties within the country. According to a report by NAPIC, property overhang remains a grave concern with a total of 31,112 residential units left unsold throughout Malaysia. Over-supply in property continues to be a long-standing issue for years to come. 

The rapid development of mega projects has always generated great excitement and enthusiasm especially for real estate investors and industry players. Major infrastructure projects such as the much-anticipated mass rapid transit (MRT)-2 and light rail transit (LRT)-3 transportation behemoths are vital in kickstarting the national economy by liberating the numerous construction sectors as well as respective sub-sectors and other related downstream businesses. On the other hand, the east coast rail link (ECRL) is set to provide a swift and seamless connection between east and west coast, being a growth catalyst for coastal states. Meanwhile, the rapid transit system (RTS) linking Johor Bahru to Singapore will invariably revive cross-border property interest within the southern state. World-class projects like Bandar Malaysia and Tun Razak Exchange (TRX) shall create globally-themed business and residential attractions, which will satisfy the huge demand for residential, commercial and retail spaces.

According to a recent research survey conducted by PropertyGuru DataSense, terrace houses are by far the most sought-after residence of choice for first-time homebuyers and property investors, in particular the millennials who prefer double-storey terraces over condominiums, serviced apartments, semi-detached homes and bungalows. The demand for condos and apartments has also remained largely lukewarm owing to their oversupply. More and more young professionals are seeking living spaces in balancing between work and lifestyle, as well as accommodating future families. Nonetheless, high-rises that are associated with transport-oriented developments (TODs) shall somehow continue to generate demand, specifically amongst younger prospects who appreciate the convenience and cost-effectiveness of such homes.

Selangor is still predominantly the best performing state for real estate, recording the largest number of property transactions in Malaysia during the first half of 2021. This is followed by Johor, Penang, Negri Sembilan and also Kuala Lumpur. Both Selangor and Penang registered the highest median price of residential properties transacted at approx. RM1.7 million. In terms of capital appreciation nationwide, Puchong in Selangor saw a dramatic increase of 32.6% whilst Shah Alam in Selangor witnessed a 28.1% growth during the first half of this year in the same period.

To buy or to sell, that is the million-dollar question. All the signs somehow point towards taking advantage of the moment whether it is boom or bust. Now is obviously the best to invest in property considering the low interest rates and also low property prices. The test of one’s financial grit is coping with economic uncertainties and financial difficulties. Having the capacity and confidence to embrace hardships and challenges is key to one’s ability in owning a home. For investors, climate and circumstance do not represent a real challenge in buying/selling properties. There are some who still profit from a glut or overhang of new properties in the market. There always exist pockets of opportunities anywhere amid economic uncertainties anytime. Being a homebuyer’s market, Malaysians are certainly spoilt for choice when it comes to property, especially properties that are located within high-valued enclaves and integrated developments.

There is overall much hope and hype for the Malaysian real estate market as national economic indicators have predicted positive signs of recovery as well as favourable perspectives for the property sector in 2022. Consumer confidence may take some time to recover amid a lacklustre homeownership situation. With targeted measures and specific incentives to boost the industry, Malaysians can look forward to more affordable homes and better bargains in the marketplace. Nevertheless, we must adopt a cautiously optimistic attitude and approach towards investing. Embracing innovative solutions to deal with the new norm is perhaps the best bet forward!