PETALING JAYA (July 27): Despite government incentives in economic packages and economic recovery plans, Nawawi Tie Leung Property Consultants anticipated that more residential properties are expected to be offloaded in the market as loan moratorium period ceases in end-September.
This article first appeared in edgeprop.my. View source here.
In its 2Q2020 market report entitled “Investors remain vigilant in the midst of Economic Recovery Plan”, the consultancy firm reckoned that there will be heightened risk of loan defaults as unemployment is on the rise and without significant economic improvement.
“In the coming months, with the expectation of no extension on the moratorium or extension given only to selected recipients, more properties are expected to be offloaded in the market. There might be downside pressure on prices, which provides opportunities for prospective buyers to purchase properties at a bargain,” the report said.
Nevertheless, Nawawi Tie Leung believed that the potential homebuyers are likely to adopt a wait-and-see approach before they proceed with their purchase to secure the best deals, coupled with concern on the economic and political uncertainties.
Reviewing the residential market in the second quarter, the report showed that there was no completion or new launch recorded in the city centre since the first quarter of the year due to Movement Control Order (MCO) which was implemented since March 18, 2020, to curb the spread of Covid-19.
According to the report, transaction prices and rents for high-end condominiums dipped marginally by -0.6% and -0.7% q-o-q, respectively at RM1,015 psf and RM3.72 psf per month in the second quarter.
The government has unveiled property incentives under the Economic Recovery Plan in order to stimulate the stagnant property market and buyers’ sentiment. Among the key incentives are the reintroduction of Home Ownership Campaign (HOC), which offering exemption of stamp duty for properties priced between RM300,000 and RM2.5 million, lifting of the 70% loan-to-value for the third property valued at RM600,000 and above, and exemption of Real Property Gains Tax (RPGT) for Malaysians upon disposal of up to three residential properties per individual.
“Though the incentives are aimed at helping prospective buyers, some investors are still in the doldrums. Property investors with short-term rental properties targeting tourists are under pressure, and investors for long-term rental properties are worrying about the sustainability of tenants and finding new tenants.
“Nevertheless, during this uncertain period, demand for rental units is expected to remain steady, as some people might opt to rent than buy houses, leveraging on the potential downward rental adjustments and their financial instability,” Nawawi Tie Leung shared.