MIDF Amanah Investment Bank Bhd Research (MIDF Research) expects property sales to turn weaker in 2021 as buyers’ sentiment will be affected by the uncertain economic outlook as a result of the re-imposition of Conditional Movement Control Order (CMCO) following a resurgence of Covid-19 cases in Malaysia.
With the pandemic set to drag recovery of the property sector, MIDF Research analyst Jessica Low Jze Tieng said the renewed concern over property oversupply would also weigh on buyer sentiment.
“Data from the National Property Information Centre (Napic) shows unsold completed residential units in Malaysia increased 6.6% in the second quarter of 2020 (2Q20) to 31,661 units, after posting four consecutive declines from 2Q19 to 1Q20. Hence, we are having a ‘Neutral’ call on the property sector,” she told The Malaysian Reserve (TMR).
Low said most of the developers recorded lower sales in the first nine months of 2020 (9M20) as property sales were badly affected by the MCO in March.
Sales picked up during the Recovery MCO and CMCO periods due to incentives announced by the government under its Home Ownership Campaign (HOC) 2020.
“The pick-up in property sales could also be attributed to the record low-interest rate.
“Overall, I would say the incentives given by the government helped boost buyer sentiment and cushioned the negative impact of lower sales during the MCO,” she added.
Among the short-term schemes under the National Economic Recovery Plan are the reintroduction of HOC, Real Property Gains Tax exemption for disposal of up to three properties and the lifting of 70% margin of financing limit for the third housing loan onwards.
Under the HOC period — from June 2020 to May 2021 — stamp duty exemption is given on the first RM1 million of a property’s value on the memorandum of transfer for properties priced from RM300,000 to RM2.5 million and 100% stamp duty exemption for the financing agreement.
CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen agreed the low-interest rates and reintroduction of HOC helped to improve sales of properties in 2020.
“Without these incentives, the sales could have been considerably lower.
“These incentives encouraged the least affected prospective buyers to buy their first property or to upgrade their existing residences,” he told TMR.
Chan expects the government to continue with the incentives and economic stimulus packages in 2021 until the economy recovers.
He said this is crucial to sustain the property market performances and alleviate a significant drop in property sales.
“Barring any unforeseen circumstances, the overall property market is expected to remain largely stable or reduce marginally.
“The real recovery will only take place when the Covid-19 outbreak is fully contained,” he added.
Malaysian Institute of Estate Agents president-elect Chan Ai Cheng said referring to Napic’s chart, 2Q20 saw a decline in the number of transactions compared to 1Q20.
“Certainly, it is more challenging to transact secondary (subsale) properties when you can’t conduct viewings and back then most of us agents were not prepared to conduct virtual viewings compared to now.
“The MCO taught us many things and one of which is the importance of good photos, videos and 360° photos/videos of the properties to allow for virtual viewings and digitalising our business,” she told TMR.
Chan admitted Covid-9 affected the property market confidence, economic activity and job stability.
“All of the stimulus packages for the property sector have helped to stabilise this sector especially for new projects with the HOC stamp duty exemption,” she added.
She believes 2021 will be a market recovery year with digitalising of business to be key.
“Work from home culture will stay in 2021. Possibly see the repurposing of the usage of properties,” she concluded.