KUALA LUMPUR: Improvements in road and rail connectivity will boost demand for well-planned residential projects in key cities, and pricing will stay stable in the future, according to Judy Ong, senior executive director of research and consultation at Knight Frank Malaysia.
She said that the current pause in overnight policy rate (OPR) hikes, coupled with better labour market conditions (unemployment rate of 3.4 per cent in June 2023), will continue to strengthen the home market.
This is despite a slowdown in the economy, with gross domestic product recorded at 2.9 per cent in 2Q2023 (1Q2023: 5.6 per cent), Ong said.
After Malaysia's economy advanced 5.6 per cent year-on-year (YoY) and the unemployment rate tightened to 3.5 per cent in the first quarter of this year, both Kuala Lumpur and Penang saw their prices grow by 0.34 per cent and 5.78 per cent YoY, respectively.
Penang was the second-best performing city in SEA in terms of price growth, according to Knight Frank's Asia-Pacific Residential Index for H1 2023.
The report tracks the movement of average residential prices within the Asia-Pacific region across 25 cities.
Out of the 25 cities tracked by Knight Frank, 14 registered positive YoY growth in the first half of 2023, which decreased from 18 in H2 2022.
Although rate hikes are expected to have reached the tail end of the hiking cycle, uncertainty will still carry through till the end of the year, it was noted.
Developers, meanwhile, have continued to launch projects, confident that demand will hold, although economic growth is set to moderate to 4.5 per cent to five per cent for the full year.
Victoria Garrett, head of residential at Knight Frank Asia-Pacific, said that after the bull run in home values over the past few years, prices plateaued six months into 2023, indicating that a correction is taking place in more markets.
With rate hikes being paused, buyers are utilising this window of opportunity to lock down on their dream homes, which is notably predominantly seen in Australia, New Zealand, and India, he said.
Garett said while the high inflationary conditions plough on, the combination of limited housing supply, restricted new construction, and robust household formation will support prices in various markets.
Christine Li, head of research at Knight Frank Asia-Pacific, said the Asia-Pacific region maintains a balanced outlook, adapting to global challenges while showcasing resilience in key markets.
Steady sales momentum, positive year-on-year growth in select markets, and buyer confidence in the face of diminishing affordability underscore the region's promising outlook.
"As we move forward, the rate of price deceleration in Australasia could start to restore confidence in the Australian and New Zealand markets, while the rise in income levels, coupled with a strong aspiration for property ownership, will sustain demand in emerging markets such as India and Malaysia," he said.