The Covid-19 pandemic has brought the world to a standstill and has wreaked havoc on many industries. The economic crisis has left many people around the world without jobs. Besides the hardest hit economy such as tourism where borders are closed and planes grounded, the building and development industry is also a hard-hit industry in Malaysia. Building developers and contractors were not able to complete their projects or developments within the stipulated time frame because of interruptions with the supply chains.
The first lockdown in March 2020 which lasted for 3 months has brought challenges to the property sector because many people suddenly found themselves out of jobs. The uncertainty of the future has resulted in a decline in the purchase and selling of properties. The process of buying properties that requires completion of documentation and making progress payments towards the housing loan was put on hold as financial institutions scaled down their operation during this period.
The property market in the commercial sector is also not spared. The pandemic has hit businesses where it hurts and forces them to close for good. My boss who has a factory in an industrial area of Kuala Lumpur was unable to rent it out after the last tenant that operates a printing business decided to stop operating in June last year. Eventhough the factory is located in a ‘good’ area, it is now left vacant. Many businesses have also shut their doors with huge “for sale or for rent” banners hanging over the doors.
According to the news report on the local property market by NST, Malaysia’s property prices rose from 2010 to 2015. Thereafter, there was a downturn due to a mismatch of house prices and affordability, property overhang, weak consumer sentiment, difficulty in getting financing, and the weakened ringgit against other major currencies. The excessive supply of houses has caused the drastic increase of overhang in 2017 and then carried forward to 2018.
The main cause of today’s sluggish property market is due to Malaysia’s imbalanced housing supply-demand system. The Covid-19 pandemic has seen the situation of oversupplying of properties worsening. This mismatch between what the citizen can afford versus what the property price is being offered in the market and together with the worsening pandemic has resulted in an extremely quiet year for developers.
The National Property and Information Centre (NAPIC) reported that the property market declined sharply in March and April 2020 due to the implementation of the Movement Control Order / lockdown in Malaysia. It began picking up again in May due to easing of restrictions during the Conditional Movement Control Order (CMCO) period.
Developers have no other choice but to set a very competitive price for their new projects to survive the pandemic. The sluggish property market has seen these property developers offering discounts, freebies, rebates and easy payment scheme to attract home buyers. With financial institutions offering low interest rates, there are also many buyers who take this opportunity to invest in properties during the pandemic.
If you are looking for home to call your own, buying another property for investment or know of anyone who is property shopping, now is indeed the best time to buy. It is the buyer’s market now, especially for first time homebuyers as the government has introduced several incentives and stimulus packages to encourage property purchase. In order to find out the monthly repayment for housing loan, deposit, interest rate, do check out this nifty mortgage calculator that can help calculate the rates quickly.
For those who would like to remortgage their home, the remortgage calculator can help to calculate the changing rates that can impact the monthly payments.
The Edge has recently reported that the property market will like see a rebound in the second half of 2021 with the arrival of the vaccine. The landed residential properties in favorable areas will be taking the lead with prices between RM300,000 and RM700,000.
