PropertyGuru 1H2022 Property Sentiment Survey

The key takeaways from the survey were summarised by S Nathan, PG's country manager below. May I respectfully suggest you read his comments first? Then read 🤠's analysis.

Shylendra Nathan, Country Manager, Malaysia (PropertyGuru.com.my and iProperty.com.my) said, “With the emergence of inflation right as the economy is starting to recover from the pandemic, we believe that more Malaysians are turning to the housing market which presents a more attractive investment option, serving as a good alternative to the more uncertain stock market.

He added, “Our Consumer Sentiment Study also found that more than half of the total respondents (55%) expect property prices to increase post-COVID-19. Hence, it is no surprise that those who have the means to are considering purchasing an investment property, especially in this current low interest rate environment.”

Post-COVID Home Buying Trends

When it comes to purchasing a home to live in, the study found that more than half (55%) Malaysian home seekers are considering properties located in the outskirts of the city. The top reasons cited for this consideration are quieter and serene environments, better pricing, more greenery, and bigger-sized homes, which can be found away from the city.

The growing preference for homes outside of the city centre is a direct reflection of the remote working trend which was fuelled by the pandemic. According to the study, 1 in 3 Malaysians surveyed said they are currently working from home and will continue to do so after the pandemic is over. This influences the perceived importance of having a home office space, as majority of Malaysians (79%) believe it is vital to have an additional room when developing new properties, even after the pandemic.

Shylendra said, “At the start of COVID-19, Malaysians weren’t sure whether their companies’ work from home policies are permanent or just a reaction to the mandated lockdowns. Now that they are confident the flexible working arrangement is here to stay, more Malaysians are open to moving to the suburb to enjoy larger spaces at lower prices. A longer commute to the office is an acceptable compromise for them if they don’t have to make the trip daily, as the advantages of living in the outskirts of the city still outweighs the drawbacks.”

In terms of the process of finding and purchasing their homes following the pandemic, 2 in 3 Malaysians responded that they would be comfortable with shortlisting and viewing properties online; while more than 1 in 4 would be comfortable to sign the sales agreement online. In fact, 10% Malaysians are comfortable conducting all the purchase functions online from start to end, indicating the need for the property industry to accelerate their digital adoption to meet the evolving consumer behaviours.

Hurdles in Buying Homes

In the last two years, various government initiatives such as the Home Ownership Campaign (HOC) and the loan moratorium have benefited home seeker and current homeowners alike. The Real Estate and Housing Developers Association (REHDA) revealed that the HOC contributed to 73,503 residential sales worth a total of RM47.38 billion after discounts, between June 2020 to September 2021. Meanwhile, 46% of the moratorium participants polled in the Consumer Sentiment Study found the financial aid helpful in managing their cost of living, and 26% stated they managed to rebuild their savings due to the moratorium.

With the end of these initiatives, consumers have called for the government to provide further support as they continue to be challenged by barriers to achieving homeownership. According to the study, non-property owners stated that they face difficulties in taking a home loan due to their unstable salary (47%) and inability to afford the down payment (41%). One of the measures that 53% Malaysians want to see from the government is the extension of the home loan tenure from 35 years to 40 years, so that this can help reduce the monthly repayment thus enabling a higher home loan eligibility.

Shylendra shared, “Only 12% of Malaysians perceive that the government is doing enough to make housing affordable in the country, which is the lowest score recorded by our Consumer Sentiment Study since 2017. As Malaysians are just starting to get back on their feet and slowly rebuilding buyer confidence after persevering through the pandemic, more incentives are needed to help spur the property market. We at PropertyGuru, are committed to supporting both the government and consumers alike to help more Malaysians own their dream homes wherever we can, with the right resources and data-driven insights.”

RC's take on the above:

I don't usually pay heed to property market sentiment surveys. Unless the respondents are all industry “experts” and the pollsters are independent. Even then yours truly will take the survey results with a pinch of salt. You see, even property Gurus can sometimes get it wrong ….

1. Will interest rate increases dampen housing loan demand in 2022?

Inflation is on the rise not only in Malaysia but also in the US. According to the Economist the Feds are likely to hike US interest rates up sharply to rein in inflation in 2022. Kay Hian UOB expect Bank Negara Malaysia to increase interest rates twice this year. The stockbroking house notes that historically mortgage demand goes down when interest rates increase.

2. Is now the right time to buy High End property in KL before property prices increase further ?

Hehehe . Are KLCC property prices going up? Somebody should tell “J,”, my perennially cheerful auction real estate agent. J sends me almost daily WhatsApp messages about high end KL properties going on the auction block, all at prices J gleefully notes are now 10% to 30% below “market valuation”. 😜

Take for example Mercu Summer Suites near KLCC where office suites are going for auction at RM616 PSF. EdgeProp Analytics has a page on Mercu Summer Suites here, suggesting the auction price PSF is about 40% below its median price PSF.
Just Google “Lelong KLCC” for the latest information on high end KL properties going on the auction market. See my 6 reasons why it's not the time to buy high end KLCC properties here.

And if you are still convinced it is time to buy a High End property in KL, why not consider Going Direct (to the Developer)

3. Buying High End KL residential property as a hedge against inflation

Heard this chestnut before. Maybe landed property in choice suburbs like Bangsar or Damansara might be good hedges against inflation. But can the same be said about some 5* luxury KLCC condominiums, held as long term property investments since 2000? From my perspective as 20+ years as a high end KLCC property landlord, the answer is No. See here . Maybe your personal experience as a high end property investor is completely different from mine. 👍 I am happy for you, bro.

4. More FTHBs and property investors are getting tech savvy

Will the process of buying property change dramatically as FTHBs and property investors become comfortable with online property search, viewing 360 virtual tours of properties, applying online for housing loans ? I have previously posted about how technology advances are changing the landscape for real estate professionals. See here.

5. More government help (aka government handouts financed by taxpayers money) to first time home buyers, struggling to get a foot up the property ladder?

🤠 says “No need lah. Just get all the developers to cut their selling prices on their inventory by 30% or more. Malaysians love bargains. “ Next time REDHA sends along a delegation to ask KPKT for a HOC extension, why not ask them all to fill in a Survey Questionnaire on how many have assets of RM 1 billion?😜

6. Extending term loans, easier access to mortgage financing, cancellation of RPG taxes etc

These proposals are the same old ideas that have been dredged up in the past. But instead of fixing the problems of the industry (high unsold inventory and rising unaffordability) they have contributed instead to a worsening overhang situation.

Post Script and Disclaimers

1. I am not a registered real estate agent. If you are thinking of buying an investment property please consult a BOVEA registered valuer or real estate professional

2. I am not a registered investment advisor. My last IA licence in another jurisdiction expired circa 2001, My posts in my blogs 360 KLCC and Real Estate Marketing 101 are based on my personal experience as a 20+ years property investor and should not be considered as investment advice.

3. Caveat emptor (Latin for Buyer Beware) . I think most sensible people know this : “Property prices can go DOWN as well as UP” .

4. A 2018 doctoral dissertation by Ms Yeap Geok Peng at University Sains Penang found no evidence that in the long run Malaysian housing is an inflation hedging asset, except for detached houses. Terrace houses were found to be a hedge against inflation in the short run only.

5. Many real estate agents list upcoming KL auction properties for sale. You can Google to find out several FB groups that focus on high end KL properties like the recent example below from J, my cheerful auction agent. The Whatsapp message I got from J shows a 31 March 2022 auction date for two office suites at Mercu Summer Suites at RM616 PSF. According to J, Mercu Summer Suites is 3 minutes to SURIA KLCC and a 4 minutes walk to Bukit Nanas monorail station.