PropertyGuru Malaysia’s recent Consumer Sentiment Survey revealed that confidence towards the Malaysian property sector remains stable with 36 percent of respondents expressing overall satisfaction with market conditions in the first half of 2017 (H1 2017). Another 24 percent expressed neutral views with negative perceptions declining to 39 percent from a high of 53 percent in Q1 2015.
The sentiment is further supported by stable price perception for all property types in Malaysia.
Stable and steady capital appreciation preferred
The key factor cited by consumers for overall satisfaction was the gradual but stable appreciation of property prices in 2017, particularly for landed residential properties in the key urban epicentres of Kuala Lumpur, Penang and Johor. This is a marked contrast to the price hikes of previous years where flipping activity by speculators contributed to market over-heating and over-supply for certain property classes.
“The property market now primarily consists of owner-occupiers or longer-term investors. Landed properties purchased largely by families or newly-weds using joint income affordability are providing the momentum for sales and purchase transactions. Homes are being bought further away from the city centre and this has emerged as a trend for 2016 and 2017. These factors are driving the development of a more stable property market where price appreciation may be smaller compared to recent years, but is also more stable and sustainable. Malaysians feel more secure and comfortable with this emerging scenario,” shared PropertyGuru Malaysia Country Manager, Sheldon Fernandez.
“This possibly could be the beginning of a healthier property market, which will further bolster confidence among Malaysians to transact.
Furthermore, we see in the PropertyGuru Market Index (PMI) indicating a bottoming out for real estate prices in the first quarter of 2017, a recovery could be on the cards. However, given rising living cost, the weakened ringgit, low oil price and other factors, the real estate sector could still see slow growth for the second half of 2017,” he added.
With regards to the impact of possible elections in 2017, Fernandez mentioned that Malaysians generally tend to adopt a wait and watch approach and transactions usually taper off before elections. However, momentum is likely to pick up once elections, if any, are concluded.
Concerns and dissatisfaction amidst market stability
Despite consumer sentiment showing overall stability, dissatisfaction still remains a considerable factor. The top two concerns impacting their overall property decisions in 2017 are Malaysians cited expensive prices of properties and 69 percent felt that the country’s economy is underperforming.
“Malaysians have accepted the market reality and are more willing to transact but their efforts are potentially being hampered by rising living costs, concerns on job security and more. Yet they remain resilient. Many are opting for joint loan applications to finance purchases,” added Fernandez.
Suburbia – The new urban utopia
On a separate note the Consumer Sentiment Survey continues to show a trend of buyers flocking to the suburbs in search of property. This indicates the emergence of new property hotspots in the suburban areas of Selangor, which is between 20 to 40 km from the city centre. 27 percent of buyers expressed their desire to buy in these outskirts areas.
Location, safety and unit size remain the top three considerations for property purchase. 52 percent of Malaysians would like to buy a home within the next six months either for their own stay or for investment purposes. Of which, 39 percent (38 percent in H2 2016) will choose to buy brand new homes while 13 percent (15 percent in H2 2016) would opt for the secondary market. With regards to budget, conditions remain relatively unchanged with the majority of respondents – 36 percent intending to buy indicating a budget of RM300,001-RM500,000.
Home loans remain vital for the property market with 93 percent of respondents indicating they will need a bank loan to finance their property purchase. 45 percent (47 percent in 2H 2016) said they will need 90 percent financing while 25 percent (22 percent in 2H 2016) would opt for 70-80 percent financing. 18 percent (19 percent in 2H 2016) would require 100 percent financing.
About PropertyGuru’s Consumer Sentiment Survey
Conducted half-yearly since 2009, PropertyGuru’sConsumer Sentiment Survey measures property sentiments and expectations around the property market to enrich decisions by helping consumers, property agents and developers gain a better perspective of the local property market. The H1 2017 survey saw 949 respondents in Malaysia and more than 3,100 respondents across Southeast Asia.