Market to taper down after recent OPR hike: PropertyGuru

PETALING JAYA: The local property market is expected to slow down as consumers, buyers and sellers evaluate the current market status before decision-making, following the recent increase in Bank Negara Malaysia’s overnight policy rate (OPR) to 3%.

According to PropertyGuru Malaysia country manager Sheldon Fernandez, interested parties will take a longer time to analyse the market value of property before making their decision due to the OPR hike.

“We’ve seen in the past, demand taper down slightly before it comes back up,” he told SunBiz.

Fernandez believes that towards the end of the year, property demand will be “a very gradual uptake” because Malaysians in general will continue to “want to hold properties”.

He is cautiously optimistic on the property market as he observed that consumers have “the intention to buy” but noted the challenges involved, based on PropertyGuru’s recent Consumer Sentiment Study (CSS) in the first half of 2023 (H1’23).

“With the current government assistance, there is an opportunity, but with the recent interest rate hike you will see the wait and see approach until conditions improve. And when it does, I think you’ll start seeing demand come back into the market,” Fernandez opined.

He pointed out that the OPR was increased from a low base as pre-Covid levels were about 3% to 3.25%, but Bank Negara Malaysia gradually brought it down to adjust to economic conditions. He noted that the interest rate is returning back towards pre-Covid conditions as in “the last few years, we’ve seen this trend slowly pick up”.

In 2022, the National Property Information Centre (Napic) recorded 243,190 residential market transactions (worth RM94.27 billion), up by 22.3% year on year, compared with 198,812 residential market trans-actions (worth RM76.9 billion) in the year prior.

“So, people will still buy when they see that the economy situation has improved or when they get their finances in order and they have confidence in going into the transaction,” he said, referring to the Napic’s report.

Meanwhile, he remarked that almost half of the respondents in the CSS H1’23, said that they needed government assistance when it comes to house ownership.

He added that the past successes around the government-led house ownership campaigns (HOC) were one of the main highlights for potential house owners.

“It is welcoming to see the government continue to provide initiatives around stamp duty reduction for property prices, that is within the affordable range of around RM500,000 and below. But they also have stamp duty reduction for prices anywhere between RM500,000 and RM1 million.

“I think this continues to help. From our CSS H1’23 survey, the HOC initiative is something that everyone has remembered clearly and also benefited from, which has helped the market in the past,” said Fernandez.

He commended the government initiatives and opined that it should be continued as it is helping to spur the industry.

He further suggested for the government to focus on “affordable housing” to ensure that Malaysians “have the right kind of supply catered to the right level of demand, based on the location and the right price point”.

“There’s a lot of focus and efforts around improving affordable housing. In that sense, I think that’s what we would recommend ourselves because that caters to the B40 and lower M40 groups around those price points, anywhere between RM250,000 and RM500,000 price point is where the market demand is at the highest,” he remarked.

In addition, Fernandez said the overhang issue is still a challenge in Malaysia. He noted that it remains to register “a significantly high number, but we’ve seen a positive downward trend in its volume, year on year”.

“(It) stems from the fundamental issue of building at the right place at the right price for the right demand. I think given all stakeholders what they’ve experienced, the government, the developers, the focus is on reducing these numbers, but also putting out new supplies that meet the demands of the property market,” he added.

Fernandez opined that in the long term the trend could taper or continue and property developers should put up properties that meet the market demand.

On key trend from its report, he observed that the supply index, which is the number of listings on its website, has “come down slightly, both in rental and sales.”

With reduction in supply, he said that there was an increase in the asking price, hence the price index for both rental and sales have gone up, which he opined is a reflection of the confidence of the seller.

Due to the price increase, demand has declined and “enquiries for such properties in sales and rental has come down significantly compared to last quarter of 5 to 6%, for sales and rental”.

“They will obviously want to get the best value for their asset and it’s also a reflection of the market conditions, so people are adapting to this new change.

“As the economy grows, as new job creation comes in and unemployment remains low, demand will come back up and they will be able to meet those price points. So it’s a reflection of market where the markets are adapting towards the most recent changes,” he said.

The study also found that 74% of Malaysian respondents prefer newly developed properties, with 20% looking towards the subsale market, and the remaining portion considering auction properties to fulfil their property requirements.

It also found that the top factors in buying or renting a home, include location (54%), security and safety of the area (46%), amenities (41%), and proximity to transport (35%).

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