Amidst Covid-19 pandemic, property price is expected to drop up to 20% - buyers market ahead, says MIEA
KUALA LUMPUR (April 16): Property prices are expected to decline by as much as 20% in the next few months with more motivated sellers, as the impact of Covid-19 continues to unfold.
During the online Asean Real Estate Forum, Malaysian Institute of Estate Agents (MIEA) president Lim Boon Ping said that the Malaysian real estate market will shift to a buyer’s market, from a seller’s market previously, as a result of Covid-19.
As such, property prices at best could decline by 10%, and at most could decline by 20%.
According to NawawiTie Leung Property Consultants director and regional head of research and consulting, Saleha Yusoff said that the property market depends a lot on economic growth. Back in 1998, the Malaysian GDP fell 7.4% in 1998 due to the Asian Financial Crisis, while The Malaysia Housing Price Index (HPI) followed suit and dropped by 9.4%. In 1999, the HPI declined 2.3%.
Bank Negara Malaysia (BNM) expects GDP growth in 2020 to be between -2% and 0.5% while the World Bank had recently revised Malaysia’s GDP growth from 4.5% to -0.1%.
However, compared to the Asian Financial Crisis which was caused by the collapse of the financial system, the situation is more challenging this time around. While the COVID-19 pandemic has limited economic activities globally, there are many other risk factors such as depressed oil prices, ongoing tensions between the US and China, and domestic political instability.
Moreover, even before COVID-19 reared its head, the local property market was already in a prolonged slowdown.
Adding to the slowdown is the issue of property overhang. According to data from the National Property Information Centre, there were 31,092 overhang residential units worth RM18.77 billion as at 3Q2019 compared with 10,897 units worth RM4.92 billion in 2015.
Saleha expects a decline in transaction volume similar to 1998’s downturn which was at -30%.
Source: The Edge & EdgeProp Malaysia