Residential market to remain attractive in 2022

PETALING JAYA: The outlook for the residential property market remains cautiously optimistic moving into the first quarter of 2022 backed by proper product positioning and various property-related incentives/initiatives under the multiple stimulus packages; the recently concluded Home Ownership Campaign (HOC) as well as developer-led marketing campaigns and a low-interest-rate environment.

Knight Frank Malaysia deputy managing director Keith Ooi (pix) said the abolition of the Real Property Gains Tax (RPGT) for property disposals in the sixth and subsequent years of ownership is long-awaited. This augurs well especially for long-term property owners who wish to dispose of their existing properties for purposes of an upgrade as well as for empty nesters looking to downsize. The exemption of the tax penalty is expected to boost activity especially in the secondary market.

“We believe the residential market will continue to self-correct amid challenges brought on by the Covid-19 pandemic. In the short- to mid-term, more direct measures, however, may be required to revitalise and sustain the slow growth momentum of the property sector as the emergence of new Covid variants continues to pose downside risks,“ Ooi said in a statement today.

According to Knight Frank Malaysia’s Real Estate Highlights 2nd half of 2021 (H2’21) which features the findings of property market performance across Klang Valley, Penang, Johor Baru and Kota Kinabalu, there were generally fewer completions and launches in H2’21 as the strict containment measures to curb the spread of Covid-19 infections delayed construction works, project delivery and completion of real estate transactions.

Knight Frank Malaysia managing director Sarkunan Subramaniam highlighted that during the review period, there was only one notable completion in Kuala Lumpur’s high-end condominium market (Ascott Residence – 199 units), bringing the cumulative supply to 66,128 units.

“The HOC which has just ended, had been beneficial for first-time homebuyers as well as developers – improving sales and reducing property overhang. In Q3’21, the volume of transactions of high-rise residential properties (including serviced apartments) in Kuala Lumpur showed upward trend, soaring 25.5% on the quarter albeit registering lower transacted value, likely supported by gradual easing of restrictions and reopening of sales galleries.”

The prohibition of physical property viewings and other sales activities (including closure of sales galleries) during the prolonged phases of lockdown had impacted housing sales. In the primary market, there has been a shift towards virtual viewings/tours with online sales on the rise as more developers embrace digital marketing. Physical property viewing, however, is still preferred for most sub-sale homes.

The pandemic has also spurred demand for properties away from the hustle and bustle of the city as evidenced by zero new launches within KL City during this review period.

Ooi said the Covid-19 pandemic has fuelled demand for residential properties especially landed housing in established and upcoming suburbs with good connectivity where prices are more affordable and competitive. With the potential shift to hybrid work arrangements post-pandemic, homebuyers are seeking ideal living spaces which are larger with higher emphasis on functionality and comfort.

“With the government’s focus skewed towards the primary market in terms of incentives and policies, the momentum in Kuala Lumpur’s secondary market remained flattish. During the review period, the overall average transacted price in Kuala Lumpur’s high-end residential sector remained relatively stable with a slight decrease of 0.6%.

“The pricing for prime housing, particularly landed residential properties, are expected to gradually rise throughout 2022 as the property market is widely expected to start recovering on the back of a more positive outlook,” Ooi added.

Associate director of residential market Kelvin Yip highlighted that the average asking prices for selected high-end high-rise schemes in KL City, Ampang Hilir/U-Thant and Bangsar were marginally lower while in the sub-markets of Damansara Heights and Kenny Hills, they remained in the positive territory. Meanwhile, the average transacted price in Mont’ Kiara continued to hold steady.

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