KUALA LUMPUR: Malaysia's property market recovery is likely to be delayed to 2022 due to the resurgence of Covid-19 cases and reimplementation of Movement Control Order (MCO), said Rahim & Co International Sdn Bhd.
However, the real estate consultant said optimism would return later this year, backed by the government's mobilisation of Covid-19 vaccines.
Rahim & Co executive chairman Tan Sri Dr. Abdul Rahim Abdul Rahman said pre-existing problems of (un)affordability, oversupply and income levels to cost of living would still be the main market hindrance.
"2020 was without a doubt a year of endurance and difficulty due to a pandemic. It is still ongoing as buyers adopt the wait-and-see approach. Some developers still never want to reduce property prices based on what the buyers want.
"The gap is even quite big amid the pandemic. The effect on the property market could persist in another year and the market will continue to be soft," he said at a virtual press conference today after launching its annual "Property Market Review 2020/2021" today.
Abdul Rahim said there was an urgent need for the entire property fraternity to solve and tackle the issues effectively and holistically to ensure long-term sustainability of the market.
The market had experienced recovery in short bursts when movement restrictions were temporarily lifted.
Rahim & Co said property transaction activities declined 15.8 per cent to 204,721 units in the third quarter of 2020, with value dropped 21.6 per cent to RM80.71 billion compared to the same period in 2019.
This had stalled the sector's recovery trends seen since 2018/2019 after several years of a lagging market.
The residential sector declined 14.3 per cent in volume in the first nine months of 2020 and 14.8 per cent in value.
Abdul Rahim said market confidence was expected to return gradually in the later parts of 2021 and into 2022 as buyers, financiers and developers were all on caution mode.
He said there was still about one million shortage of formal housing in the population due to mix-match on pricing and types of housing in selected areas.
"Every state government should relook at its own (land matters) problem such as the availability of affordable housing. Compressive studies need to be done in all the states including housing development approval to address the problems face by buyers."
He said developers should consider building a certain percentage of developments at affordable rates based on the market demand.
Research director Sr Sulaiman Saheh said the market could see a significant recovery in the second half of 2022 to pre-2019 levels but rather muted in 2021.
"Overhang units have been increasing due to MCO as people cannot complete their transactions. But now, I think it will be challenging and unsold units to remain quite high.
Meanwhile, digital real estate site operator REA Group Asia said the national demand for subsale property had contracted 1.3 per cent in 2020 due to tepid demand for high-rise properties.
However, demand for terrace houses remained positive at a capital growth of 2.6 per cent in major capital cities especially in Shah Alam and Seremban.
REA Group general manager Premendran Pathmanathan said 2021 would be a challenging year with market growth dependent on country's economic growth.
"We believe the property market will recover after the much anticipated rollout of the Covid-19 vaccines. The government has extended stamp duty exemptions to the secondary market under 2021 Budget, further providing opportunities for property seekers to explore subsale residential properties," he said in a statement today.
He said the progressive reduction of the Overnight Policy Rate and reduction in the Employees Provident Fund contribution would help to ease home loan repayments.
This has sparked some interest in property purchase especially among middle and upper-income households.
REA Group, which operates iProperty.com.my, said housing demand in Kuala Lumpur City Centre had contracted by 8.9 per cent with 11 per cent capital growth decline.
Similarly, demand in Georgetown contracted by 11.9 per cent with 8.7 per cent capital growth decline.
Shah Alam and Seremban recorded positive demand of 1.7 per cent and 0.9 per cent respectively.
More people were seeking houses in outskirt areas, lowering demand and residential property prices in the cities, the firm said.