By NST Property, published on August 24, 2021
Homebuyers are more interested in purchasing a subsale residential property rather than buying a new property in the primary market, typically from a developer.
A subsale property is a second-hand home that is sold in the secondary market, where all matters pertaining to buying and selling are between the buyer and the existing homeowner.
Premendran Pathmanathan, general manager for customer data solutions & quality at iProperty.com.my said that subsale property has always been strong representing about 80 per cent to 85 per cent of total market transactions.
Despite the ongoing Covid-19 pandemic subsale is still at that level," he said during an online virtual conference of the bi-annual iProperty.com.my 1H 2021 property demand analytics here today.
Pathmanathan said the number one reason why there is more interest in subsale property is the location.
"Subsale is a ready unit in your ideal location. These locations are usually mature, and there is connectivity coupled within shopping malls and hospitals. It has everything. That is why subsale is always preferred to new primary projects," he said.
Pathmanathan added that areas like Kuala Lumpur and Petaling Jaya will remain hot spots for subsale property as land is limited and more people want to own a home there.
"You won't get a certain amount of projects coming in as space is limited and that makes subsale in this areas popular," he said.
On whether there is a rising demand in any particular locality because of the work-from-home order by the majority of companies, Pathmanathan said there are always the top 10 places high in demand but there are also smaller locations that are growing in demand.
He cited Bangsar and Salak South in Kuala Lumpur, where demand for larger size properties has been on the rise since the start of the pandemic.
Pathmanathan said in Selangor, he sees more demand in areas like Rawang, Setia Alam, and Serendah as the houses there have bigger space.
"People are more willing to purchase in these areas as the homes are bigger and they don't have to commute to work. A lot of companies are always considering hybrid working or fully working from home. The quality of life has improved as they are staying in a bigger unit," he said.
Improved consumer sentiment
Pathamanathan said that overall consumer sentiment has improved this year despite the lockdown.
He said this is seen from the intention to purchase with higher unique visits and property listing supply consisting of terraced houses, condominiums, service residences and apartments on the property portal, and loan applications staying above pre-Covid-19 levels.
The subsale residential property demand saw positive growth in 1H 2021, rising to +19.2 per cent from -2.5 per cent in H1 2020.
The value of home loan applications grew +86 per cent year-on-year (YoY) from RM96.4 billion in 1H 2020 to RM179.4 billion in 1H 2021, while the value of loans approved increased by +92.6 per cent YoY in the same period.
"It is encouraging to see recovery for the subsale residential market in 1H 2021. Covid-19 did not adversely affect this segment as it did in the first half of last year where the 1H 2020 demand figure dropped into the negative region. One of the critical factors which supported demand recovery in 1H 2021 is that property seekers have warmed up to the idea of conducting their property search journey online," Pathmanathan said.
He said with the Overnight Policy Rate at a record low of 1.75 per cent, many consumers are searching for property bargains in a low-interest-rate environment.
"The upward trend of approved home loan applications is promising. It shows that financially abled Malaysians are still interested in purchasing homes either for their stay or for investment purposes. However, positive figures aside, aspiring homeowners should plan before committing to long-term borrowing, as interest rates might not stay low for long. A return to pre-pandemic interest rates could result in higher monthly repayments in the future," he said.
Pathmanathan said interest in terraced houses remains the highest in Malaysia with a +29 per cent YoY increase and this has allowed sellers to maintain their high asking prices at +1.6 per cent.
"We also see that there is a higher demand for terraced houses in the suburbs which drove asking prices up marginally. Houses in the suburbs generally offer bigger space at a lower cost. The asking prices for condominiums or serviced residences, however, are dropping and this is mainly due to the existing overhang," he said.
Pathmanathan pointed out that property developers who own units in their housing projects and they have not been able to sell have started to drop prices.
"I don't have the data on how much they have cut but according to listings, there is a six per cent decline in prices for serviced residences as compared to last year, and four per cent for condominiums," he said.
Pathmanathan said the asking prices of high-rise homes in all major states, in general, have been reduced due to a high number of unsold units and as a means for sellers to attract buyers.
"As our country ramps up its vaccination program and moves towards herd immunity, we hope the economy and by extension, the property market will continue to recover in the second half of the year," he said.
Performance in key markets
Kuala Lumpur posted an +8.1 per cent growth in subsale residential demand, compared to +0.3 per cent in the first half of 2020 (1H 2020).
Pathmanathan said the asking prices in affluent areas such as Damansara Heights, Sri Hartamas, Mont Kiara, and Desa Parkcity are more likely to be higher as these are prime areas for wealthy property seekers.
However, property sellers in other parts of the capital city are lowering their asking prices, signalling a slight decline in holding power, he said.
The demand for terraced houses in Kuala Lumpur is robust at +27.1 per cent with asking prices growing by +2.9 per cent.
Bangsar saw strong demand for terraced houses priced between RM1.5 million and RM2 million (1,500 sq ft to 2,000 sq ft).
In contrast, Taman Tun Dr. Ismail attracted visitors interested in high-rise units priced between RM1 million and RM1.5 million (1,500 sq ft to 2,000 sq ft).
Selangor's subsale residential property demand grew by +17.6 per cent in 1H 2021, mainly driven by the +20.7 per cent YoY demand increase for terrace houses (+3.5 per cent for asking prices).
Puncak Alam and Dengkil saw high demand for terrace houses priced between RM500,000 and RM750,000 (1,500 sq ft to 2,000 sq ft), whereas property interest in Semenyih and Sungai Long was for spacious terrace houses (2,000 sq ft to 3,000 sq ft).
Pathmanathan said Penang benefitted from rising demand for properties around industrial hubs.
Compared to 1H 2020, Penang's subsale residential property demand growth has recovered from -6.5 per cent to +23 per cent YoY due to interest in industrial areas such as Batu Kawan and Bayan Lepas, which host many tech manufacturing companies.
On the mainland, lower-priced landed properties commanded higher asking prices between RM300,000 and RM500,000, mainly in Juru, Nibong Tebal, and Seberang Jaya.
"Interestingly, Bukit Jambul saw a surge in visitors for condominiums priced above RM1 million," said Pathmanathan.
The Johor subsale residential property market experienced positive growth of +36.5 per cent in 1H 2021 from -22.8 per cent in 1H 2020.
The increase came mainly from local property seekers as foreign demands, especially from Singapore, remain low with international borders still closed.
"Landed homes are still the preferred property type in Johor, with terraced houses priced between RM300,000 and RM500,000 (1,500 sq ft to 2,000 sq ft) being the top choice," said Pathmanathan.
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