How Will Covid-19 Affect The Property Market
There seems to be a neutral outlook of the property market with some hopeful opportunities in the beginning of this year. But ever since Covid-19 has become a pandemic, it has notably affected businesses across various industries including the local property market. If you were planning to sell or buy a property and not sure of what you should do, you are not alone. We have gathered what we know about the real estate industry and where they are headed now.
You are probably wondering, what about the property market? The truth is it will be negative – prices will go down. People are moving away from buying luxury items including property. They are saving up to face the worst times ahead because the future is unknown.
On 24th March, Bank Negara Malaysia (BNM), announced a new policy on the automatic six-month moratorium on all bank loans starting from April 1. This moratorium is to provide aid to borrowers facing financial difficulties due to the Covid-19 pandemic.
Property buyers breathe sigh of relief upon hearing this. Although this six-month loan deferment package would provide assistance, operational costs such as salaries will still be incurred for developers.
Furthermore, another challenge faced by the developers would be some disruption to the property transaction process, such as difficulty in property viewing and also title searchers due to the current MCO. Many people would also tend to avoid showrooms and sales galleries during this pandemic, and also possibly for a few weeks or months after this MCO. Hence, this would affect the property market as lower sales would be generated from less viewing or visits in showrooms and galleries. If the MCO extends, more losses will occur, as developers would still need to pay out salaries and other costs of running.
With the current MCO, buyers’ affordability will also be affected as people would tend to save up for survival. Some may not even receive a full amount of salary or pay and hence those who are planning to buy property would delay their plans until stability of income is acquired. This would then affect the property market as sales go down during the MCO and at least a few months or even years after the MCO. According to a news article from New Straits Times (March 2020), an analyst who would like to remain anonymous shared that “rough times” are ahead for developers.
The analyst shared that the government could assist the industry by organizing another round of Home Ownership Campaign (HOC) after the Covid-19 cases are under control. It was good news that the HOC 2019 has sold 31,415 residential units valued at a total of RM23.2 billion as at November 2019, also has hit the sales target of RM17 billion.
However, the final value of total sales from HOC 2019 could have exceeded RM30 billion, according to other sources close to the Real Estate and Housing Developers’ Association Malaysia (Rehda). It was shared that if they were to include final sales in the month of December, the amount could have exceeded RM30 billion. The source shared that: “People could afford to buy properties within their budget, and this is good. With 10% and 30% discounts given to buyers, including freebies, developers are able to attract the buyers. Developers are hopeful that HOC 2020 could relive this trend.
Nevertheless, all this would be temporary and as the Covid-19 cases subside and the economy improves, the property market will also get back on track.
At SHR Properties, we strive to provide you with the best knowledge on properties, even during tough times like this. Have enquiries about the property market? Contact us today and we will guide you from there.
About Us :
SHR Properties is a real estate company which offers comprehensive services including real estate property investments, development, sales, marketing, operations, and management. The company creates quality urban projects based on customer-oriented mode of management for a better living and working environment. They also provide professional expertise and resources, along with asset management risk analysis and other services.