Malaysia’s property market performance significantly declined in 2020, falling by 9.9% in volume and 15.8% in value, says the Valuation and Property Services Department.
Its 2020 annual report stated that there were 295,958 transactions worth RM119.8 billion.
The residential property market reported 191,350 transactions worth RM65.86 billion, which was an 8.6% decrease in volume and 9% decrease in value, while the commercial property market reported 20,255 transactions worth RM19.53 billion (a 21% decrease in volume and 32.6% decrease in value).
Selangor was the highest contributor to the national market share for both residential and commercial property.
For the residential market, the primary market saw fewer new launches with only 47,178 units compared with almost 60,000 new units launched in 2019.
“The sluggish property market and cautious buyers’ sentiment contributed to the modest sales performance at 28.7%.”
However, there was an improvement in terms of residential property overhang, with the report showing that it was down by 3.6% in volume compared with 2019, but with a 0.5% increase in value.
In 2020, the number of residential units which were unsold but under construction declined by 1.3%, while units unsold and not constructed declined by 22.6%.
On the price of houses, the Malaysian House Price Index stood at 199.3 points in 2020 with the lowest annual growth since 2010, of only 0.6%. All states recorded an annual growth in house prices in 2020 except for Kuala Lumpur (-1%), Selangor (-0.7%), Penang (-0.1%) and Sabah (-1.3%).
For the commercial sector, commercial property overhang in the serviced apartment segment increased and formed the bulk of property overhang for the year.
“There was a total of 23,606 serviced apartment overhang units worth RM20.76 billion, up by 37.7% in volume and 38% in value against 2019,” the report said.
The department also said commercial units that were unsold but under construction increased to 35,258 units (4.2% increase), while those unsold and not constructed increased to 8,153 units (6.4% increase).
Meanwhile, for the shopping complex segment, the department said the market continued to soften, recording an average occupancy rate of 77.5% (compared with 79.2% in 2019).
Kuala Lumpur and Selangor recorded an occupancy rate of 82% and 80%, respectively, while Johor and Penang saw a lower occupancy rate of 74.9% and 72.8% respectively.
“Thirteen shopping complexes (totalling nearly 400,000 sq m) were completed in the review period, with 42 complexes (1.81 million square metres) currently in the incoming supply while 12 complexes (510,000 sq m) are in the planned supply stage.”
For offices, the department said that the overall performance was less promising, with an 80.2% occupancy rate in 2020, compared with 80.6% in 2019.
There were 11 new office buildings completed in 2020, while 50 buildings are in the incoming supply, and 13 in the planned supply.
The department expects the property market to remain cautious in 2021, depending on the country’s economic and financial outlook.
“Incentives introduced under the Prihatin Rakyat Economic Stimulus Package and Short-term Economic Recovery Plan in 2020 as well as the 2021 budget would continue to support the property market,” it said.
The department also expects the rolling out of Covid-19 vaccinations to boost business confidence, household sentiments and the economy, which may lead to a soft increase in the property market in the second half of the year.
Finance minister Tengku Zafrul Aziz in his speech during the report launch said, moving forward, the property market performance is expected to recover in line with the economic situation.
“The finance ministry has also started to draft the 2022 budget and will study all matters, all of which will be given holistic attention.
“For the short- and long-term, the government will restructure the economy to ensure solid and inclusive growth through the 12th Malaysia Plan and the Shared Prosperity Vision 2030. This will include ensuring the supply of conducive and quality housing for the B40 and M40.” – FMT