The Consumer Sentiment Index for the property market in 3Q21 rose to 101.7 from 64.3 in 2Q21 and 98.9 in 1Q21, showing the overall upbeat mood of the market, due mainly to the improved financials and job confidence recovery.

According to the Property Market Review 2021/2022 report by Rahim & Co International Sdn Bhd launched on 27 January, in the first nine months of 2021, Malaysia recorded a total of 201,065 property transactions worth RM98 billion, a slight drop of 1.8 percent year on year (y-o-y) in volume. However, there was a notable increase of 21.4 percent y-o-y in value.

Rahim & Co director of research Sulaiman Sahed said that after property market transactions fell in 2020 (-9.9 percent in volume and -15.8 percent in value) from 2019’s pre-Covid period, the first half of 2021 saw a significant rebound as the economy and market gradually adjusted to a pandemic environment with a 21 percent increase in volume and 32.1 percent in value. However, the overall performance was dragged down in 3Q21, when the Full Movement Control Order (FMCO) was implemented. Among others, the residential sector has seen the most significant slowdown in terms of transactions.

“Transaction activities showed growth in the first half but slowed down in the third quarter, resulting in an overall growth of 2.6 percent for the first nine months of the year. On the supply side, new launches in the primary market had dropped, as developers were still adjusting and affected by the pandemic and the country’s containment measures,” said Sulaiman at the launch of the report, adding that sporadic quick sales were observed for owner-occupier and domestic-focused markets.

Several states in Malaysia have recorded notable residential property transaction performance, such as Kuala Lumpur (+10.1 percent), Selangor (+11.5 percent), Penang (+18.8 percent) and Sabah (+8.4 percent). Overall, residential property transactions in Malaysia grew 2.6 percent in the first nine months of 2021.

“The market recovery efforts were further supported by the extended HOC (Home Ownership Campaign) till the end of 2021, the exemption of RPGT (real property gains tax) and the initiatives provided under Budget 2022. A more holistic support was also given by the economic stimulus introduced throughout the year that aimed to restore the livelihoods of Malaysians and revive the business sectors,” Sulaiman added.

As at 3Q21, there were 56,734 residential overhang units (including serviced apartments and small office/home office [SoHo] units) worth RM41.59 billion in Malaysia, the majority of which comprised high-rise developments.

“The overhang units seen across all price segments signify that the root cause is not just the properties’ absolute selling prices, but also the size, psf price, type, location as well as buyers’ personal preference and considerations when making a purchase decision,” he said.

The report reveals that residential property priced between RM500,001 and RM700,000 is the category with the most unsold units in 3Q21, at 14,061 units, or 24.8 percent, of which 83.2 percent are high-rise residential properties.

Meanwhile, property priced between RM300,001 and RM500,000 came in second, with a total of 12,229 units, or 21.6 percent. Similar to the above category, the majority (87.8%) of the property in this category are high-rises.

Johor had the most overhang units in 3Q21, with 23,224 units worth RM19.29 billion, followed by Kuala Lumpur (8,955 units, worth RM7.94 billion), Selangor (6,970 units, worth RM4.82 billion) and Penang (5,023 units, worth RM4.12 billion).

Despite the country’s overhang easing slightly quarter on quarter (q-o-q) in 3Q21, the overall number of unsold dwellings (overhang, unsold under construction and unsold but not yet constructed), which stood at 205,217 units, is the highest since 2016.

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