KUALA LUMPUR: Malaysia is seeing slow improvement in the real estate market as consumers grapple with lingering post-Covid-19 effects, according to PropertyGuru Malaysia.

In its latest Malaysia property market report, the company said the second quarter (Q2) of 2022  logged a 1.1 per cent increase quarter-on-quarter (qoq) and 3.64 per cent year-on-year (yoy) in the Landed Property Sale Price Index.

This comes with a 1.96 per cent dip qoq in the Landed Property Sale Demand Index, but a 5.21 per cent increase yoy.

The group said the trend indicated that landed homes continued to be the preferred buying option, although currently potential homebuyers were dampened by affordability issues and financial difficulties, thus resulting in slower demand. 

PropertyGuru and iProperty Country Manager for Malaysia Shylendra Nathan said consumer sentiments were still affected by lingering porst Covid-19 effects despite the improvements in the market.

"With the attention on rising inflation, potential homebuyers are cautious, seeking restabilisation and improved job security on the back of the current economic climate.

"With the lack of financial incentives to take advantage of, buyers may be hesitant to move forward with their purchasing plans until the economy restabilises," he said in a statement today.

He added that consumer sentiment in the market would likely only improve with the nation's economic recovery journey as the year progressed.

"Meanwhile, we see potential for property demand to turnaround in the coming quarters, as Malaysians with the means will be looking at property as a hedge against inflation. With the advantage of land value to factor in, the rising prices of landed properties offer larger margins for capital appreciation in the long term," he said.

He said according to Bank Negara Malaysia's Financial Stability Review for the second half (H1) of 2021, there had been visible improvement in the overall economy and financial sector.

However, the high number of unsold properties remains a key issue for the industry.

The report stated that over 180,000 units in the housing market remain unsold, reflecting pre-existing affordability issues that were worsened by the pandemic.

According to the High-Rise Property Sale Price Index in the report, prices for stratified properties fell by 0.23 per cent qoq in Q1 2022 while only registering a 0.51 per cent yoy increase in the same period.

However, the supply of high-rise properties continued to increase by 3.25 per cent qoq and 18.24 per cent yoy. This indicated a price mismatch against buyer appetite on other factors such

as location, facilities, and accessibility.

However, on the rental front, the High-Rise Property Rental Price Index moved up slightly by 0.91 per cent qoq and inched upwards by 0.20 per cent yoy, while the High-Rise Property Rental Demand Index posted an increase of  6.08 per cent qoq and 111.23 per cent yoy jump in the last quarter.

"The consumer buying appetite is currently suppressed in this current time, as seen evidently with the increase in the High-Rise Property Rental Demand Index.

"We have seen a steady pattern of millennials expressing a desire for well-located condominiums – however, the lack of take-up and maintenance for these high-rise units, despite the overhang, has shown a price mismatch against current buyers' appetite", said Nathan.

Despite signs of improvements in the market and an expected gradual recovery in the second half of the year, homebuyers continue to be bogged down by affordability, inability to

secure financing, job security, and overall economic stability.

"Therefore, we will likely only see an improvement in consumer sentiment in tandem with the

recovery of the economic environment and the availability of government initiatives that will

result in better financial security during this period.

"The wait-and-see approach that buyers are taking is further exacerbated by the ongoing political instability and uncertainty on economic and health policies, which further dampens the market.

"While we await improvement on these external factors, sellers will have to take the initiative to incentivise buyers with attractive packages to spur the market", he added.