Malaysian property market takes a turn for the better in H1’22

Malaysia’s property market posted a better performance in the first half of 2022 (H1’22) with activity increasing 36.1% in volume and value year-on-year (y-o-y) to 188,000 transactions valued at RM84.4 billion as all property sectors recorded growth.

The property market’s performance recorded a rebound in H1’22, a reflective of normalising economic activity as the country move towards endemicity. With the positive projection on economic growth by Bank Negara Malaysia, expected between 5.3% to 6.3% in 2022, supported by the implementation of various government initiatives and assistance, the property market performance is expected to be on track.

Deputy Finance Minister I Datuk Indera Mohd Shahar Abdullah said Malaysia’s reopening of the international borders and its transition to the endemic phase continues to support the economic recovery which was previously affected by the Covid-19 pandemic. Domestic demand is strengthening, underpinned by the recovering job market conditions and ongoing policy support.

“This can be seen with the increasingly strong economic growth by 8.9% in Q2’22 compared to the increase of 5% in Q1’22 and 3.6% in Q4’21,” he said in his speech at the launch of the Property Market First Half of 2022 Report by the Valuation and Property Services Department (JPPH) yesterday.

“The residential subsector continues to drive the market by commanding more than 60% of the total number of transactions and almost 54% of the total transaction value. This is followed by the agriculture subsector with a share of almost 22.1% in terms of (figures) while the trading subsector is in second place with a share of 16.6% in terms of transaction value,” he added.

Additionally, residential property sector recorded 116,178 transactions worth RM45.62 billion in the review period, increased by 26.3% in volume and 32.2% in value y-o-y. The four major states namely Penang, Kuala Lumpur, Johor and Selangor formed about 47% of the total national residential volume.

The commercial property segment recorded 15,169 transactions worth RM14.02 billion, which rose by 45.4% in volume and 28.3% in value compared to the same period last year. Selangor contributed the highest volume and value to the national market share, with 26.5% in volume (4,025 transactions) and 33.5% in value (RM4.7 billion).

Meanwhile, the report found that residential new launches have softened during the period.

“More than 10,000 units of newly launched were recorded, down by 66.7% against 31,687 units (revised) in H1’21. Against H2’21, the new launches were lower by 13.3% (H2’21: 12,173 units). Sales performance for new launches recorded at 20.3%, slightly lower compared to H1’21 (revised 20.6%) and H2’21 (28.1%),” it said.

Johor takes the top spot as the state with the highest number of new launches in the country, capturing nearly 23.8% (2,509 units) of the national total with sales performance at 31.8%. Sabah recorded the second highest number (1,335 units, 12.7% share) with sales performance at 10.6%. Perak came in third (1,317 units, 12.5% share) with sales performance at 19.4%.

The property overhang situation has improved amidst market recovery, whereby it recorded a total of 34,092 overhang units worth RM21.73 billion, which is down by 7.5% and 4.6% in volume and value respectively against H2’21. Most of the overhang is in Johor with 6,040 units worth RM4.73 billion. Likewise, the unsold under construction residential units saw a decrease of 11.1% to 62,404 units compared to H2’21 (70,231 units).

On the same note, serviced apartment sub-sector recorded 22,674 overhang units with a value of RM19.32 billion, indicating a decrease of 6.7% and 5.6% in volume and value respectively against H2’21. Johor recorded the highest overhang in the country with 68% (15,423 units), followed by Kuala Lumpur and Selangor, with 18.9% (4,279 units) and 9.9% (2,248 units) share respectively.

The report also found that house prices has continued its low pace growth, as the Malaysian House Price Index (MHPI) continued to increase at a moderating trend. As at Q2’22, the MHPI stood at 203.5 points, up by 0.5% on annual basis. However, the index points decreased by 1.2% against Q1’22 of 205.9 points.