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KUALA LUMPUR (Nov 5): Local property buyers have either delayed or cancelled their plans to acquire property following the Covid-19 outbreak, according to a survey by CGS-CIMB Research.
In a sector note Nov 4, CGS-CIMB analyst Ngo Siew Teng said the respondents did not believe that now is a good time to acquire a residential property, and viewed current property prices as unaffordable.
“They preferred equity market as an investment option, signalling wealth spillover effect from retail market rally to property could be limited,” said Ngo.
CGS-CIMB found that 44% of respondents had plans to purchase a property in 2020 prior to the Covid-19 outbreak.
Only 35.5% of the respondents who had plans to buy a property in 2020 before the outbreak are still planning to get a property this year after the movement control order (MCO), it said.
Meanwhile, 32.7% of those respondents are postponing their purchases to 2021, and 31.8% have changed their mind about buying a house.
“Overall, 41% have unchanged interest in property investments, 39% have decreased interest, while 20% have increased interest following the Covid-19 outbreak,” said CSG-CIMB.
The survey gathered that most of the respondents view current property prices as unaffordable and have a purchasing budget of RM250,000 to RM499,999.
Property buyers also prefer to buy newly-launched properties and landed residential units in Kuala Lumpur and Selangor. Hence, location and pricing are important factors in property buying.
The survey revealed that the majority of property upgraders and first-time buyers favour landed residential properties, which are more in demand at the moment.
“We also observed that property investors have a higher interest in commercial retail space or shops as well as vacant land, while the other groups are more receptive to acquiring property through auctions,” added CGS-CIMB.
Based on the survey, the research house said developers need to adjust to buyer preferences with land banks in the Klang Valley and large land banks to cater to landed residential units.
“We expect developers to be well-positioned to capture the potential home buyers’ interest with properties priced at an affordable range around RM500,000, even if property buying sentiment remains muted,” stated CGS-CIMB.
CGS-CIMB prefers Sime Darby Property Bhd as it is well-positioned to tap into the existing market trend, as the majority of its new launches are landed residential at its existing townships, and the bulk of its land banks are located within Klang Valley.
“We reiterate sector Neutral given the weak macro outlook, affordability issues and likely lower property sales, which is balanced by KL Property Index’s undemanding valuation,” it said.
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