The elimination of the Real Property Gains Tax (RPGT) for property disposals in the sixth and subsequent years of ownership bodes well, particularly for long-term property owners looking to upgrade and empty nesters looking to downsize.
Knight Frank Malaysia deputy managing director Keith Ooi said the exemption from the tax penalty is expected to boost activity, particularly in the secondary market.
According to Ooi, the firm believes the residential market will continue to self-correct due to the Covid-19 pandemic.
"In the short- to mid-term, more direct measures, however, may be required to revitalise and sustain the slow growth momentum of the property sector as the emergence of new Covid variants continues to pose downside risks," he said.
Ooi said that the overall outlook for the residential property market remains cautiously optimistic for the first quarter of 2022, supported by proper product positioning and various property-related incentives/initiatives under the different stimulus packages.
He said that other factors that will contribute to more transactions in the market this year include developer-led marketing campaigns and the current low-interest-rate environment.
Following the success of the National Immunisation Programme, Ooi said that the country's 'new normal' had been restored two years into the Covid-19 pandemic.
With the implementation of the four-phase National Recovery Plan, unveiled in mid-June 2021, there was a gradual resumption of economic and social activities and the relaxation of interstate and international travel restrictions for vaccinated residents.
"The pandemic has fuelled demand for residential properties especially landed housing in established and upcoming suburbs with good connectivity where prices are more affordable and competitive. With the potential shift to hybrid work arrangements post-pandemic, homebuyers are seeking ideal living spaces which are larger with higher emphasis on functionality and comfort," said Ooi.
According to Knight Frank Malaysia's Real Estate Highlights 2nd Half of 2021 (2H2021), which includes property market performance findings from Klang Valley, Penang, Johor Bahru, and Kota Kinabalu, there were fewer completions and launches in 2H2021 as measures to combat the spread of Covid-19 infections delayed construction work, project delivery, and real estate transaction completion.
There was only one substantial completion in Kuala Lumpur's high-end condominium market, Ascott Residence, with 199 units, bringing the total supply to 66,128 units during the review period.
Meanwhile, the overall average transacted price in Kuala Lumpur's high-end residential sector remained relatively stable, with a 0.6 per cent decrease.
Ooi believes that the pricing for prime housing, mainly landed residential properties, is expected to gradually rise throughout 2022 as the property market is widely expected to start recovering on the back of a more positive outlook.
The average asking prices for selected high-end high-rise schemes in KL City, Ampang Hilir / U-Thant, and Bangsar were marginally lower by sub-market. At the same time, they remained positive in the Damansara Heights and Kenny Hills submarkets.
The average transaction price in Mont Kiara remained stable.
Moving forward, the rental market is expected to pick up as the country's borders gradually reopen, easing both short and long-term visits by business travellers and investors, beginning with the Vaccinated Travel Lane (VTL) between Singapore and Malaysia, where mandatory quarantine rules are waived.
"There is mixed performance in Johor Bahru's residential market when comparing high-rise residential. The trend and demand for landed residential homes continue to remain resilient," said Debbie Choy, director of Knight Frank Johor.
Developers expanding their land banks, according to Choy, are also more focused on finding suitable locations, with more important sites for landed residential developments.
According to her, more landed home launches are expected in the near future.
In terms of the secondary market, she said that the asking prices of selected high-rise residential projects in Johor Bahru's city and fringe areas and the Iskandar Puteri area were slightly lower than the previous period (1H2021).
Moving forward, the rental market is expected to pick up as the country's borders gradually reopen, easing both short and long-term visits by business travellers and investors, beginning with the VTL between Singapore and Malaysia, where mandatory quarantine rules are waived.
According to Alexel Chen, executive director of Knight Frank Sabah, the overhang figure for all residential sub-sector in Kota Kinabalu during the review period, which was 1,205 units, has increased significantly compared to the corresponding period (3Q2020: 267 units).
The condominium/apartment segment accounted for approximately 97 percent of the overhang units, owing primarily to the influx of completed units under newer phases of launched projects.
"Given the more cautious market sentiments during this trying time, we anticipate a slower market absorption rate for overhang high-rise products in the primary market. However, due to a lack of new launches in recent years, well-located and reasonably priced residential products, particularly landed residential homes, continue to pique the interest of genuine homebuyers in the sub-sale market," Chen said.
Moving forward, Chen said that the company does not expect property launches to be postponed indefinitely.
"When market conditions improve, it will gradually release pent-up demand and new supply," he said.
Penang's residential sub-sector has improved, with a higher volume and value of property transactions in 3Q2021.
According to Mark Saw, executive director of Knight Frank Penang, with the state government's commitment to increasing homeownership coupled with the extended Penang Home Ownership Campaign until the end of June 2022 and the enforcement of mandatory installation of fibre optic telecommunication infrastructure for all new developments, the residential property market will improve further.