Subsale transactions dominate Q1 2021

Photo by Sadiron Ismail from PxHere

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PropertyGuru DataSense, the data, analytics and solutions arm of PropertyGuru, recently released the Q1 Property Market Update report which features insights based on Malaysia’s residential property market transactions. The report found that the total number of residential property transactions in Q1 2021 saw a year-on-year (YoY) drop of 44.7%, compared to the same period last year.

Of the overall number of property transactions across Malaysia, a majority of 61.2% were found to be made by first-homebuyers (FHBs). In three of Malaysia’s major property markets – Klang Valley, Johor, and Penang, FHBs outnumbered purchases made by investors by 13.2%, 65.2% and 0.08% respectively.

Joe Thor, Managing Director of PropertyGuru DataSense shared, “With increased worries over COVID-19 cases as well as a softer-than-expected GDP performance, it is no surprise that we observed a lower confidence in the market and a YoY dip in residential property transactions in Q1 this year. However, it is encouraging to note that incentives such as the My First Home Scheme and the Home Ownership Campaign have helped to drive first-homebuyers to take that step towards homeownership during this quarter.”

Sub-sale Units Outsold New Developments

Sub-sales were found to have dominated the market during this quarter, with many property owners selling their assets at competitive prices for liquidation, offering both FHBs and investors alike an opportunity to purchase them at below market value. This is especially prominent in the Klang Valley, which recorded a three-year high for sub-sale transactions at 83.72%.

For FHBs, buying on the secondary market means being able to get a quality home in a good location on a smaller budget. This is in line with findings from the PropertyGuru H1 2021 Consumer Sentiment Study, which found that of those who prefer sub-sale properties, majority cited the ability to scout the location and environment before buying (55%) and ease of managing the purchase with a smaller budget (39%) as the top reasons for their preference.

“Sub-sale property has typically appealed to more seasoned investors largely due to the ability to place a down payment on the unit, making it easier for an investor to invest in several properties. The secondary market also allows greater access to property, particularly landed units, in better locations. As land banks are used up, new developments often must settle for more remote locations which may take investors a longer time to see a return on the appreciation value,” said Joe.

Buyers Preferred Landed Property; Increased Transactions in Suburbs

With a large portion of the nation’s workforce working from home since the start of the pandemic, the type of properties that buyers are purchasing has also changed. This is reflected in the transaction data from Q1 2021, which found that homebuyers are favouring larger, more spacious units in the RM300,000 to RM500,000 price range. Buyers preferred landed units over high-rise in Q1 2021, with terrace houses making up 54% of transactions in Malaysia followed by condominiums/apartments (18%).

Joe continued, “Now that many employees no longer need to travel to the office every day, they can opt for areas further away with lower density and more spacious layouts that could comfortably fit an extra room for a home office. We observed that the desire for larger, more spacious property has resulted in a shift towards terrace houses as well as properties in the fringes of city centres, driving up transactions in smaller townships in Q1 2021. We believe this trend is likely to continue into the second half of 2021.”

Many among the top 10 projects with the greatest number of transactions this quarter are areas located away from city centres in self-contained townships such as Bukit Sentosa and Bandar Bukit Beruntung in Rawang, Bandar Putra in Kulai.

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