KUALA LUMPUR, Jan 8 — The residential property market registered improvement in the second half of 2023 despite high inflation and a relatively higher borrowing cost fuelled by a normalising overnight policy rate, property consultancy Knight Frank Malaysia said in its outlook on the property market released today.
Market activity in the residential market improved in the first nine months of the year, with 183,534 transactions recorded and a collective value of RM73.1 billion to grow at 1.3 per cent at an annual rate. The transactions saw a 3.5 per cent increase in value, the report said.
“Despite the inflationary pressures and elevated OPR, the residential property market appears to be moving in a positive direction, marked by increased sales volume, new property launches and successful completions,” said Judy Ong, senior executive director of research and consultancy, Knight Frank Malaysia.
In Kuala Lumpur, a total of 9,938 residential units worth RM8.3 billion changed hands in the first three quarters of 2023. Sales volume rose slightly by 1.2 per cent but the corresponding sales value was lower by -7.2 per cent on the year. There were 9,821 transactions worth RM8.9 billion, the group said.
In the apartment, condominium and serviced apartment categories, a total of 7,446 units worth RM6.1 billion were transacted, representing annual growth of 5.6 per cent and 0.1 per cent in transacted volume and value respectively.
Penang’s high-rise residential sector also improved, particularly within the serviced apartment category that saw higher volume and value of transactions within the same period, the report said.
The state’s volume of transactions for the condominium or apartment category was marginally higher by 1.4 per cent although the value of transactions was still in the negatives, at -4.7 per cent compared to the previous year. Total transactions value in the strata segment was RM642.7 million in the third quarter of 2023 versus RM674.2 million the year before.
The same segment in Johor saw volume and value of transactions increased by 76.1 per cent and 101.4 per cent respectively.
Knight Frank Malaysia said the high-rise residential property market in Johor is experiencing a “positive resurgence” but did not explain what drove the increases.
Retail conundrum
But it said Malaysia’s retail property sector fell below market expectations in the second quarter of 2023, contracting by 4.0 per cent year-on-year, the report said, which it attributed to a high base effect and dampening spending power fuelled by persistent inflation.
The scheduled Sales and Service Tax (SST) rate hike this March could also weigh down on growth as businesses would likely pass on cost to consumers. The group revised its 2023 retail sales growth projections for Malaysia downwards to 2.7 per cent from the earlier projection of 4.8 per cent.
“The impending Sales and Service Tax (SST) rate hike, from six to eight percent effective from 1 March 2024, coupled with the introduction of a five to ten percent luxury tax and restructuring of subsidies, may dampen growth in the retail market,” said Yuen May Chee, director of property management, Knight Frank Malaysia.
“Retailers experiencing higher tax liabilities will see rising operational costs, potentially eroding their profit margin and this may lead to price adjustments, which ultimately will impact consumers.”
Still, the retail property market is expected to sustain growth in the coming year on the back of improved tourism, healthy institutional and foreign investments, with steady growth in wage and hiring.
