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COVID-19 is expected to push down residential home prices over the next 12 months in Malaysia

Despite the Malaysian government lowering foreign ownership price threshold of properties in the country to RM600,000 (USD 144,596) from RM1 million for this year, our latest report on Malaysia - Property Survey and Index Malaysia Q3 2020 - reveals foreign buyer share of new home purchases did not pick up as COVID-19 pandemic and resulting travel bans stymie foreign investments into the country.

Property Survey and Index Malaysia Q3 2020 is the first industry report based on widespread sources to track the impact of COVID-19 on Malaysia’s real estate sector. It provides an overall view of industry expectations for prices, rentals, and market activity as well as insights and data that aim to bring transparency to what can sometimes be an opaque market. The Index provides information that any buyer, seller, or developer would find useful and invaluable.

Here are some highlights from the report: 

• COVID-19 is expected to push down residential prices by -4.8% over the next 12 months before climbing again to post 10.6% growth over the next two years. States with the strongest forecast price growth over the next two years are Penang and Perak while Kuala Lumpur and Selangor are expected to experience the lowest forecast price growth. 
• Residential rental rates are expected to fall as well by 3.8% over the next 12 months, before recovering to post 7% growth through Q3 2022.
• Home transactions by local first-time buyers will increase by 4% this quarter while foreign buyer share fell is expected to fall by -7%.  Real estate agents expect local investors to complete more transactions in the year to come.
• Perak, Johor and Sarawak are the states where growth in local investor transactions is expected. 
• The foreign buyer outlook is highest in Penang where 43% of industry respondents expect an increase in foreign buyer transactions over the next 12 months while Sabah has the lowest expectations, with only 15% of agents expecting growth.
• Expectations of foreign buyer transaction growth are expected to be significantly lower in the coming 12 months. In Q1, 55% of respondents expected the number of foreign buyer transactions to increase, while only 33% of surveyed real estate agents expect the same today. 

Note: On 18 March 2020, the Malaysian government imposed a Movement Control Order (MCO) after the to mitigate the spread of the Coronavirus pandemic. Under the MCO, Malaysians will be barred from leaving the country and tourists and foreigners were restricted from entering the country. After successfully containing the spread of Covid-19, the MCO was lifted to recovery mode  (RMCO) on June 10, allowing businesses to reopen if they follow social distancing protocols even though the country’s borders remain closed. On 28 August, the Malaysian government announced that the RMCO will be extended until 31 December 2020. Travel to Malaysia will continue to have strict controls and leisure travellers will not be permitted to visit as long as the RMCO is in place. 

For more details of the report, download it HERE.