2016 Malaysia’s Property Market

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According to PropertyGuru’s Malaysia Property Market Sentiment Survey Report H1 2016, the years 2014 and 2015 were not favourable for the real estate industry in Malaysia and the industry experts have a mixed feeling towards the market at the moment.

However, this year, things are expected to improve as people are warming up to the idea of purchasing properties. 6 out of 10 people are planning to purchase property in the next 6 months, even though 6 out of 10 public feel that the market has become more negative as opposed to 2014.

In Malaysia, there are an overwhelming number of new home owners. According to the survey, among the top 5 reasons on why people invest in properties are to get higher yields on rentals (56%), for good capital appreciation (55%), for retirement planning (46%), for a better environment (46%) and to own a house due to affordable pricing (36%).

Amongst home buyers, location is the most important criteria when considering a home and Klang Valley is becoming the most favoured place to own a home. Almost 55% of the participant already living in the area, with 70% of the participants are looking forward to acquire properties there.

Besides location, the other factors that influence the buyer’s decisions are:

  • 59% – PSF or per square foot price;
  • 58% – scope of future development in the area;
  • 57% – size of property/unit;
  • 57% – reputation of the builder;
  • 57% – potential rental yield;
  • 56% – security and safety of the location;
  • 55% – loan eligibility;
  • 54% – potential capital appreciation

A visible and favourable trend is that the average satisfaction level of Malaysian public towards local real estate market has been increasing since H1 2015 during which it reached from 25% to 28%. The top 5 reasons driving satisfaction level towards property investment are:

  • 49% of people feel that there is a good long-term prospect for capital appreciation;
  • 28% feel that the real estate market is stable and resilient;
  • 27% feel satisfied because the properties are well developed;
  • 20% of people feel satisfied in the face of rising real estate prices;
  • 19% feel satisfied due to good financing option

Real estate boom is yet another reason that is affecting people’s decision to buy a property. As per the survey, 55% of people find that the oversupply of properties in Malaysia is a real issue. Meanwhile, 66% of people feel that implementation of GST will influence their decision to buy a property.

Excessive pricing of properties is the number one deterrent for purchasing property in Malaysia amongst potential buyers. Besides that poor economic performance, the rapid increase of property prices, unpredictable real estate market and touch approval process of bank loan applications are holding back buyers to purchase a property.

There has also been a steady decline in the “overseas property sentiments” and increased interest for commercial properties.

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