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Challenges ahead for residential property market, says PropertyGuru

Bleak economic outlook sees buying interest cool as property enquiries fall 5.6% in the second quarter.

PropertyGuru says potential homebuyers are likely to delay their purchasing plans because of higher borrowing costs and rising cost of living.

PETALING JAYA: Malaysia’s residential property outlook remains overcast as global economic uncertainties have affected the appetite of buyers for big-ticket purchases such as property, according to PropertyGuru’s market report for the second quarter (Q2 2023).

DataSense, PropertyGuru’s market data and analytics platform, captured downward trends in the sale demand index as property enquiries dropped 5.6% quarter-on-quarter (q-o-q).

However, the sale price index saw asking prices of properties listed on PropertyGuru’s website rose 1.6% quarter-on-quarter in 2023.

Rental saw a decline, with the rental demand index falling 6.3%, likely due to substantial hikes in rental prices. This was reflected in the rental price index increasing by 4.7% q-o-q.

“The rise in rental prices did not go unnoticed, and the Selangor state government has announced plans to look into the feasibility of expanding its smart rental scheme to low-cost housing,” said PropertyGuru, a property marketplace operator.

“While inflation is projected to moderate in the coming months, global economic uncertainties have affected the appetite of Malaysian buyers for big-ticket purchases. Similarly, the sale supply index saw a slight decrease of 0.6% as property owners continued the wait-and-see approach towards their investments,” it added.

OPR hike to dampen demand

Sheldon Fernandez, PropertyGuru country manager for Malaysia said the hike in overnight policy rate (OPR) recently would make it difficult to see an uptick in property demand.

“Potential homebuyers are likely to delay their purchasing plans because of the higher borrowing costs and rising cost of living. Currently, it is still too early to gauge how much impact this will have on the market.

“The decrease in rental demand, as highlighted in our report, could reflect that Malaysians are becoming even more cautious, perhaps opting to stay with family members and commute to the city to work instead of renting their own place,” he said.

Issues like affordability, a higher cost of investment, mismatching demand and supply as well as “sick” housing projects have all contributed to the challenges faced by the industry as a whole.

“While we do see the government taking the first steps to address these issues, developers must also play their part in assessing what homebuyers need – because that’s changed overtime,” Fernandez said.

Johor is up-and-coming

In the first quarter, Johor was the state with the most-viewed residential properties.

The most viewed condominium project was R&F Princess Cove, a luxury serviced apartment with 3,224 units in Tanjung Puteri, developed by R&F Development Sdn Bhd.

TriTower Residence, developed by SKS Group, was the second most viewed project, and both projects share the common feature of being located near train stations.

Interest in properties has remained strong in the state, and is expected to persist due to sizeable investments in data centres in the region.

“As a burgeoning digital hub, Johor is attracting attention to its real estate market. The prospect of new job opportunities may entice more Malaysians to relocate to the peninsula’s southern region,” said PropertyGuru.

While Malaysia is projected to see moderately lower economic growth this year, Fernandez is cautiously optimistic of a more attractive property market towards the second half of the year.

“As property ownership costs are expected to increase with the OPR hikes, we foresee property buyers and sellers alike will continue to navigate a challenging and unpredictable property market,” he said.