Malaysia Property Market Outlook 2022
Overall, the property market looks to be stabilising as we move into 2022, following the disruptive impact of the COVID-19 crisis. Between Q2 2020 and Q2 2021, sharp drops in transactional activity were brought by rising infection rates and government-imposed movement restrictions, resulted in price depressions and fluctuating supply volume.
This is also in line with a general improved outlook for the Malaysian economy, which is anticipated to perform better in 2022. Furthermore, the move from a “pandemic” to an “endemic” classification of the crisis means the government is adopting sustainable long-term policies in dealing with COVID-19.
This will result in more consistent regulations on economic activity and bring clarity for businesses operations, improving sentiments toward financial security and consumer confidence.
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Report Highlights
Looking Back at 2021
Despite a momentary respite in late 2020, the resurgence of COVID-19 infections in the first quarter of 2021 saw the return of “lockdown” restrictions in the country.
The situation dashed hopes of a quick recovery for the property market, which was previously anticipated to occur by the end of 2021.
Nevertheless, supply continued to grow as the construction industry was among the few vital sectors that were allowed to operate during the Full Movement Control Order (FMCO) period between May and July 2021.
“With prices trending in a positive direction in the final quarter of the year, and sentiments gradually, but steadily improving, it is highly likely more property purchasers will want to catch the potential upswing of market prices while the financial environment remains favourable. This is a momentum that is expected to pick up pace and spill over into 2022,” said Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.
Key Trends in 2022
Looking ahead, the positive price indicators captured in H2 2021 promises a more stabilised market in the first quarter of the coming year. Despite issues surrounding the pricing mismatch experienced by the property sector prior to the onset of the pandemic, it was widely recognised that demand remained strong among property seekers, many of whom (at the time) were simply priced out of the market.
As such, the prevailing climate of low-entry costs for properties could spur some early activity among first-home buyers who had previously put aside plans because of the unfavourable financing climate.
The recent Budget 2022 announcement, tabled on Oct 29, saw the removal of Real Property Gains Tax (RPGT) on homes that are sold from the sixth year onwards. RPGT was initially introduced to curb speculation during an overheated market period. Its partial removal will help liberalise the market for investors and second home buyers without long-term plans to retain their properties.
Budget 2022 announced that the government would invest RM2 billion in guarantees to banks via the Guaranteed Credit Housing Scheme. This is aimed at assisting those in the “gig economy”; those with the funds to pay for loans but cannot produce an income statement because they do not earn in the traditional sense.
Progress on mega projects in the country is expected to generate excitement in the property market in 2022.
Macro Trends Hint Towards a Year of Recovery
Unexpected lockdowns dampened expectations of a recovery this year, with Malaysia having to slash its 2021 growth outlook twice before settling on a 3% to 4% projection.
However, the success of the National Recovery Plan, a ramped-up vaccination drive and the gradual reopening of economic activity has now boosted hopes of a turnaround in 2022.
Importantly, Malaysia’s labour market recovery is projected to gain further momentum in the remaining months of 2021 and improve considerably by 2022 as more businesses resume operations.
As long-term financial security is a key prerequisite behind property purchasing decisions, the return of job security and consumer confidence is a vital factor that will lead to the revival of interest in the property market.
Big Property Bets in 2022
1) The beginning of a new cycle
Following four consecutive quarters of downward trending prices, the recent increase captured by the Property Asking Price Index in Q3 2021 indicates prices have hit the bottom of the curve and are now at the starting point of an upward swing. In short, this means it is a great time to buy for those who are on good financial footing.
2) Terraces remain the top choice
Overall, terrace houses remain the most sought-after property type in the country. According to research by PropertyGuru DataSense, they are predominantly the top choice for both first-home buyers and investors, representing the largest volume of properties purchased by these two groups in H1 2021.
Driving the continued popularity of terraces is the growing demand among millennials, who have now made double-storey terraces their preferred target above condominiums, according to the Malaysia Consumer Sentiment Study H2 2021.
3) Selangor the strongest performing region
From a regional perspective, Selangor recorded the largest number of property transactions in H1 2021. Among the key regions in the country, this was followed by Johor, Penang and Kuala Lumpur.
Selangor and Penang recorded the highest median price of properties transacted at RM1.7 million.
4) Hotspots that deserve your attention
Key hotspots that are likely to spillover in 2022 for being preferential are within locations that have witnessed capital growth in 2021.
Should You Buy or Sell Property in 2022?
All indicators point to an ideal time for buyers to get into the market. It is an opportune moment to take advantage of low prices while they are on an upward trend, and benefit from prevailing low interest rates while they last.
However, an important factor to consider before committing is the stability of personal finances and job security in the current climate, which is still coping with uncertainties.
Conclusion
Consumer confidence is expected to trickle back into the market in the first half of the year and grow steadily in the second. Crucial to achieving this is a general strengthening of the overall economy, which seems to be the main focus of the government under Budget 2022.
Even as we move forward with a more optimistic outlook, it is important to note that sustained improvement in consumer confidence will continue to be linked to positive or negative developments on the COVID-19 front.
For more in-depth analysis on the above, read the full Malaysia Property Market Outlook 2022:
Or, read past years' Property Market Outlook Reports:
Malaysia Property Market Outlook 2021
Collection • December 2020
Malaysia Property Market Outlook 2020
Article • December 2019
Malaysia Property Market Outlook 2019
Article • December 2018
