by Kenny Teoh

Managing Director, Hectarworld Group

Prior to the Covid-19 pandemic in 2020, issues such as property price affordability and oversupply are already affecting overall Malaysian property market. The Movement Control Order (MCO) since March 2020 and closed borders due to Covid-19 have inevitably caused uncertain economic outlook, weak business and consumer confidence. As a result, prospective buyers and investors are currently adopting a “wait and see” attitude. All these factors have further exaggerated the overall sluggish Property Market since 2020.

However, the Covid-19 pandemic is expected to be under control by this year-end, supported by our National Vaccination Programme that has been going full force since June 2021. This roll-out of the vaccination programme will surely help speed things up and hopefully allow the country and its people to get back to their new normal lives and restart most business activities that were negatively affected since the beginning of this pandemic. At the time of writing this article, our new Health Minister, Khairy Jamaluddin claimed that 80% of the Malaysian adult population are targeted to be fully vaccinated by end of October 2021 and the country can expect to move from the Covid-19 pandemic into an endemic by then; a phase where we start living with the virus. 

The overall property market is expected to rebound and experience pent-up demand when our lives and business activities are progressively restored by year end. Property market growth depends very much on the country economic growth rate. The historical trend is a testament to this relationship. 

As shown in Figure 1 above, the Asian financial crisis struck our country in 1997 and the market did badly in 1998 at – 9.4% GDP Growth, but recovered almost immediately in 1999 at 6% GDP Growth. Similarly, the Subprime mortgage crisis in 2008 saw the market plunged in 2009 and again positively recovered by 2010 onward. During early 2020, Covid-19 pandemic hit our country and the GDP Growth started to decline at about -0.4% to -0.5% at Q1 2021 and expected to stay sluggish throughout 2021 due to the implementation of Full Movement Control Order (FMCO). Positive recovery is expected in 2022 when new normal is restored and the health crisis is brought under control through herd immunity.  

Regardless, current property market is quite conducive for first time home buyers and property investors due to the low-interest rate regime and “hit rock bottom” property price (as shown in the Figure 1 above) even in some matured locations. In addition, the government’s allocations in the Budget 2021 to revive and ensure the continuity of mega infrastructure projects and the extension of Home Ownership Campaign (HOC 2020-2021) till Dec 2021 would be much needed boosters to the overall property market. 

We will be at the end of the tunnel soon, and we expect the economy to reopen when the country achieves its targetted herd immunity by end of October 2021. Property market will start to rebound by year end and begin its positive recovery in 2022 onwards.