A Market Sentiment survey by Agents found that Secondary Market (Subsales) and Rental are expected to pick up the most growth post-COVID19 lockdown
Uncertain times ahead for the property sector
KUALA LUMPUR: Real Estate Agents and Real Estate Negotiators (REN’s) are bracing themselves for a slowdown, especially among those who are concentrating their efforts on Commercial Real Estate and luxury project sales. A recent market sentiment survey by therooftalks.com, a real estate news and lifestyle weblog was conducted among the active local Real Estate Agents and REN professionals to evaluate the impact of COVID-19 towards their respective markets. From the findings, it looks like the winners and losers are clear with optimistic Agents and RENs sharing that there will be a bullrun in transactions post-MCO for buyers who are looking to pick up good deals from homeowners who are looking to consolidate their assets, especially those who are in the commercial sector with little holding power.
Listening to the man on the street
With Agents being in close relations with their clients; buyers and sellers, they’re aware of what’s going on, and if there’s any doubts and concerns about proceeding with ongoing transactions with their clients. The Agents who responded to our survey mostly represent the Residential Secondary Sales (Subsales) composition cluster (35.2%), Residential Rentals (24.1%) and Commercial Sales/Rental (14.8%).
With the central bank, Bank Negara Malaysia (BNM) recently reporting growth in 2019 in the residential sector, it explains that 83% of transactions that are accounted for in 2019 is valued below RM500,000.
Softer Overall Market impacts morale
In BNM’s recent Annual Report, they expect housing transactions to continue with a downtrend, as the unemployment rate is also expected to rise up to 4%, in line with the findings as collected from the Agents. However, there is a cluster of Agents who believes that more transactions will take place in light of the COVID-19 situation, where homeowners or investors who do not have the holding power would need to sell it fast to accumulate their assets to tank into the 2nd half of 2020.
Shifting Gears to find new Gold
As unsold properties and new projects saw a sales growth in 2018-2019, it was largely because of the government, developers and BNM’s effort over the Home Ownership Campaign (HOC) that allowed waivers on transaction/stamping fees that saved buyers a lot of money. With the start of 2020 taking on a pandemic, the market is once again left open to the onslaught of sentiments to dictate if it goes up or down.
Just by looking at the above bar chart, we can see that many Agents are leaning towards a stronger growth on the Subsale market than the other property markets. There’s still a good number of Agents who believe that New Project sales that are rightfully priced and the rental market will pick up in numbers as shown in the Agent market sentiment survey results.
Diving deeper into the winner and losers post COVID19 property market sentiment, the Agents and RENs expects to see a cut in growth or a significant downtrend. About 48.1% of Agents and RENs feels that Offices, Shop lots and Commercial Real Estate would be significantly impacted by the COVID19 onslaught, as it would affect overall sales transactions and rental returns especially for businesses that were impacted by it. The rest of the 51.9% is almost equally spread in terms of Impact towards the other respective markets, with a note that the Luxury market may have more impact and that the Subsales market may have the lowest negative impact from post COVID19 MCO.
From the pie chart above, we can see that slightly more than half of the Agents and RENs are likely to remain their position even despite the likelihood of a MCO extension in lieu of the worsening COVID19 situation. A third of them (33.3%) may be out of work and unemployed due to the harsher conditions, as we know that almost all Agents in Malaysia are on a contractual basis. Our Market Sentiment survey findings show that they’re very likely and quite likely to change their line of work (if at all successful to transition into a new role).
Though this survey doesn’t necessarily represent all the Agents from the industry, it’s a safe presumption that from an early look at it, it’s an indicator for a recession.
It’s not all devastating news, there’s a light at the end of the tunnel
We looked back at what the numbers were like since the last global economic downturn, especially what happened since the 2008 market crash. We saw large movements in the real estate industry 2 years after as the economy picked up. A look back into 2010-2013, Malaysia recorded an increased number of transactions and property transaction prices.
According to The Star report, it said that over a 20-year cycle, property prices have moved up by as much as 45% on a national basis after an economic crisis but dropped by a fifth in each recession.
Adding on from the report, “In the 1986 recession, prices dropped 20% over a two-year period but during a seven-year upturn, prices went up 45%. During the 1997/98 Asian financial crisis, prices went down 20% but rose by much as 45% after that for another seven years or so. Between 2008 and 2010, the market was down by another 20% but from 2009/2010 onwards, it has been rising. It is still rising today. But salaries have not risen in tandem.”
If it works out as expected, brighter days are ahead of us after the storm. Our advise to all real estate professionals on what to do during the COVID19 situation is to hang on tight and ride it out.
TheRooftalks.com is a lifestyle and property blog to get the latest news and coverage about the property scene in Malaysia.
If you’re looking for the best picks of subsale homes by trusted Agents in the Klang Valley, visit bumbung.co to look for the best homes in TTDI, Bangsar, Bandar Utama, Ara Damansara, Damansara Uptown, Saujana, Tropicana and Petaling Jaya.
If you haven’t read our previous article about “John, the Agent – If Mak Cik Kiah was a realtor” to see what help can you get during this difficult time. Head on here to read the full story: http://therooftalks.com/2020/04/03/real-estate-fraternity-remain-resilient-to-ride-out-this-covid-19-economic-fallout/