There is an increase in sales in smaller townships outside of big cities because buyers prefer larger units priced between RM300,000 and RM500,000.
This is the trend seen in the first quarter of 2021 (1Q 2021), with over 30 per cent of transactions in the Klang Valley, Johor and Penang falling within that range, according to PropertyGuru Malaysia.
The firm said that among the top 10 projects with the most significant number of transactions in 1Q 2021 are areas away from city centres in self-contained townships such as Bukit Sentosa and Bandar Bukit Beruntung in Rawang, Selangor, and Bandar Putra in Kulai, Johor.
Buyers favoured landed apartments over high-rise units in 1Q 2021, showing a need for more space due to frequent lockdowns and work-from-home regulations.
The firm expects these trends to continue into the second half of 2021 with the extension of incentives like the Real Property Gains Tax (RPGT) exemption, low-interest rates, and the work from home policy.
According to PropertyGuru DataSense managing director Joe Hock Thor, terraced houses account for up to 54 per cent of transactions in Malaysia, followed by condominiums/apartments at 18 per cent.
Joe said, "Now that many employees no longer need to travel to the office every day, they can opt for areas further away with lower density and more spacious layouts that could comfortably fit an extra room for a home office."
The firm has noted that the need for larger, more spacious property has switched to terraced houses and properties on the outskirts of city centres, driving up transactions in smaller townships in the first quarter of 2021.
Joe anticipates that this tendency will continue into the second half of 2021.
Overview of the residential market in Q1 2021
PropertyGuru DataSense just released the Q1 Property Market Update report and found that the total number of residential property transactions in Q1 2021 saw a year-on-year (YoY) drop of 44.7 per cent, compared to the same period last year.
According to the firm, there is a significant probability that general economic activity, including the housing market, will perk up near the end of the year, particularly in the third and fourth quarters.
"Unlike last year, where the shock of the pandemic and subsequent lockdowns resulted in a YoY GDP contraction of 17.1 per cent, the World Bank projects 2021's2021's gross domestic product (GDP) to recover at four per cent to five per cent, taking into consideration the flare-up in Covid-19 infections, the country's vaccination rate, and a surge in pent-up demand later in the year," said Joe.
While residential transactions have continued to fall this year, he believes that buying a home is a significant milestone and a vital investment for many people.
First-time purchasers made up 61.2 percent of all property transactions in Malaysia, possibly encouraged by numerous marketing activities by developers and government financial support.
First-time homebuyers outnumbered purchases made by investors in Klang Valley, Johor, and Penang by 13.2 per cent, 65.2 per cent, and 0.08 per cent, respectively.
Sales for the secondary property market also took centre stage this quarter, outnumbering sales for new developments by over 20 per cent, with some property owners selling off their property at a competitive price for liquidation, offering both first-time homebuyers and investors alike an opportunity to purchase them at below market value.
The report showed that this was more prominent in the Klang Valley, which recorded a three-year high for sub-sale transactions at 83.72 per cent.
"Sub-sale property has typically appealed to more seasoned investors largely due to the ability to place a down payment on the unit, making it easier for an investor to invest in several properties," said Joe.
According to him, buying on the secondary market means receiving a quality property in a decent location on a lower budget for first-time homeowners.
He said the secondary market also provides more access to the property, primarily landed apartments in desirable areas.
"Sub-sale property has typically appealed to more seasoned investors largely due to the ability to place a down payment on the unit, making it easier for an investor to invest in several properties," he said.
Rise in the median purchase price for residential property
According to the Malaysian Property Market Index, the overall median asking price per square feet in the Klang Valley, Johor and Penang declined by a YoY rate of 1.79 per cent in 1Q 2021.1
While asking prices in Kuala Lumpur and Penang dropped by a YoY rate of five per cent and 1.87 per cent, respectively, asking prices in Selangor increased slightly by 0.85 per cent.
Johor registered the sharpest drop in asking prices compared to the other two areas, falling by a 5.66 per cent YoY rate.
PropertyGuru Malaysia'sMalaysia's 2Q 2021 Property Market Index foresees price trends will likely fluctuate as long as uncertainties persist but note that positive developments, such as the acceleration of the vaccination programme, could encourage consumer confidence in the second half of the year.
According to the firm's data, the median price of purchased units in the Klang Valley and Johor did not dip below the affordable range and is on an upward trend beginning in Q3 2020, however Penang had more people purchasing units over the affordable range in 4Q 2020.
Property transaction prices in Klang Valley, Johor, and Penang ranged from about RM2 million for bungalows to RM161,000 for flats.
The median for terraced houses and condominiums were out of the affordable range at RM528,164 and RM350,000, respectively.
Low demand for new developments
According to the report, transactions for new developments in the Klang Valley have been on a downward trend since 2019, despite a brief peak in 3Q 2020, reaching a YoY drop of 55.6 per cent.
However, demand for new developments in Johor and Penang have remained relatively steady since 3Q 2019.
Breaking down the Q1 2021 transaction data for new developments further, buyers in the Klang Valley preferred terrace houses and more expensive high-rise units such as condominiums and serviced apartments in areas like Puchong, Klang and Kapar.
The report showed that Kapar, in particular, has been in the top three areas with the most transactions for new developments since 2019.
In Johor, buyers preferred landed new development units over high-rise, mainly terraced and semi-detached houses, mostly buying in Muar, Johor Bahru and Bakri.
The report also stated that, unlike previous years, Kluang and Skudai were not among the top three most transacted areas in 2021.
In Penang, most buyers also preferred new terraced and semi-detached houses as well as flats.
The top three most transacted areas for new developments this quarter were Sungai Bakap, Simpang Ampat and Bukit Mertajam.
