PropertyGuru Malaysia has revealed its latest Property Market Report (MPMR) for Q1 2024, showcasing a residential market characterised by stability amidst moderated fluctuations in key indicators such as demand, number of listings and asking prices. The Q1 2024 report indicates a minor 1.1% QoQ drop in the Sale Demand Index and a 4.4% decline in the Sale Supply Index. This is mainly attributed to seasonal factors such as the Chinese New Year celebrations. Similar declines were observed in Q1 2023 (-5.5%) and Q1 2022 (-2.3%) respectively. On the housing price front, it is encouraging to note that the Sale Price Index recorded a mild 1.4% QoQ increase.
“The figures from our report indicate a decline in demand due to seasonal trends. However, infrastructure developments are seen to positively influence the property market dynamics in specific submarkets. For instance, Johor’s residential properties saw a 2% increase in its Sale Demand Index. The uptick in property enquiries is attributed to the upcoming Rapid Transit System (RTS) project, which serves as a catalyst in bolstering property demand in the surrounding areas. Looking ahead, such developments will continue to play a pivotal role in shaping property demand by influencing development opportunities and job accessibility in the immediate area. Therefore, it is essential to factor in these influences when analysing market trends and making investment decisions,” said Kenneth Soh, Country Manager of PropertyGuru Malaysia.
Sale Market Poised for Stability Despite Slight Demand Drop
Despite seasonal dips in residential demand and supply, the market is expected to maintain its stability. The MPMR indicates a slight 1.1% QoQ decline in Q1 2024’s Sale Demand Index and a 4.4% drop in the Sale Supply Index, reflecting seasonal adjustments rather than economic issues. Amid the ongoing uncertainties, including heightened geopolitical tensions and economic downturns, property seekers have adjusted their housing expectations accordingly. This indicates that the market is well-positioned for stability, maintaining its capacity to operate effectively and contribute to a healthier property market, provided that no major unforeseen shocks occur.
Looking at the Economic and Monetary Review by Bank Negara Malaysia’s (BNM) outlook, the nation’s economy is forecasted to grow between 4% and 5%, driven by resilient domestic demand and an increase in external demand. Furthermore, recent loan data by BNM indicate that total applications for property purchase loans in 2023 amounted to RM605.3 billion, marking a YoY increase of 5.7%. Interest rates have been held steady as well, reflecting BNM’s confidence in the ability to maintain inflation at sustainable levels.
Increase in Rental Property Supply Pulls Down Demand
Similar to the sale market, the Rental Demand Index for residential properties recorded a decline of 11% QoQ. This was partly due to seasonal festivities which typically affect rental activity at the start of the year. This seasonal influence was evident in Q1 2023 as well, when the Rental Demand Index declined by 6.2%. However, the decrease in rental demand in Q1 2024 may also be influenced by challenges such as rising asking rents and an increase in property supply.
The Rental Supply Index in Q1 2024 witnessed a significant YoY growth of 31.3%, despite experiencing a 1.8% decrease from Q4 2023. Similarly, asking rents went up by 2.2% QoQ, marking a 12.4% jump from Q1 2023. This unexpected trend could be due to various factors, including improved property conditions, increased demand in certain areas, or changes in the local real estate market. This trend highlights the complexity of market dynamics, where counterintuitive trends can occur even amidst declining demand.
“While these demand and supply figures suggest a period of adjustment, the market’s resilience and the nature of these shifts provide a cautiously hopeful outlook. The balance between supply and demand is evolving, and with careful navigation, the rental market could maintain its stability. This would continue to attract property investment from buyers looking to enjoy good rental yields, especially in areas showing faster economic growth and those with infrastructure developments in the pipeline,” said Kenneth.
Infrastructure projects and government initiatives provide pockets of hope
“In Johor, the RTS has spurred property demand in the state. Likewise, the upcoming completion of the Penang LRT Mutiara Line in 2030 is anticipated to boost the appeal of properties in the vicinity. Despite market’s uncertainties, there is a cautious optimism that strategic infrastructure projects such as the Penang LRT, will contribute positively to market growth.
On a separate note – with property prices remaining high, property seekers are open to compromise on amenities to afford properties. According to the PropertyGuru Malaysia Consumer Sentiment Survey H1 2024, approximately two in three respondents anticipate a 20% discount for properties with fewer amenities. We are eager to see the introduction of the Housing and Local Government Ministry (KPKT)’s newly announced public housing model, the Program Residensi Rakyat (PRR). With a construction cost of RM300,000, these homes will provide quality housing to those in need,” Kenneth added.
