What does Covid-19 mean for the property market in Malaysia?

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The Covid-19 pandemic has had an alarming impact to the world, causing panic and uncertainties in terms of livelihood, job securities and future concerns. As our economy takes a little plunge in these trying times; here are some good-to-knows about how Covid-19 will impact the property market in Malaysia.

As a Buyer

It’s safe to say that the widespread pandemic has yet to have a huge effect in this aspect. If you’re looking to invest in property this year, the fact remains that property prices will remain the same and it doesn’t look like it’ll be going down anytime soon. This is mainly because property is still what we consider a necessity, much like the food you buy at restaurants or grocery stores. 

For the property market to crash, the rule of thumb applies whereby at least 20% of property owners would need to have trouble paying off their bank loans - much like what happened during the 2008 economic crisis in the United States. While it’s not impossible for it to happen here in Malaysia, especially given the current Covid-19 situation, the likelihood of a market crash still depends on the country’s holding power.

Banks play an important role in ensuring property owners are able to commit to their mortgages. Governed by good bank regulations, home loans applications are approved based on the buyer’s individual income as well as their capacity to pay in the long run. That’s a big part in why we do not see ‘panic-selling’ happening just yet. Given current events, however, Bank Negara Malaysia (BNM) has also sought to provide financial aid to homeowners with the announcement of the “6-months moratorium”, which means a 6-month automatic deferment of all loans - including Mortgage Loans/Home Loans (for more details such as compound interest, please refer to your bank).

However, an added advantage for you as a buyer would be the soft market state we’ve been in in recent years. What a soft market essentially means is that there are more sellers than there are buyers. Instead of just looking into new developments, you could also consider going through auctions or sub-homes in an area of your choosing. All it takes is a little bit of research, and the right property agent/negotiator to help you own the property of your dreams.

As a Renter

Covid-19 has unfortunately caused major setbacks for a number of employees, especially those in the labor force. Whether you’re looking to rent, or you’re currently renting, your predicament in relation to rental agreements would be highly dependent on your tenancy agreement. 

If you are already renting and are experiencing trouble paying your monthly dues, it’s advisable that you contact your landlord and try to work out a deal. Be it to ask for a reduction in rental for a number of months, or to negotiate for late payments, it’s always best to come to a discussion where both parties can benefit. Refer back to your tenancy agreement and see if there are terms that may be helpful to you.

As a Seller

Times can definitely be challenging right now, especially when you have mortgages to pay. A big question that most sellers would have is: is it a good time to sell my property? The answer is really dependent on your current financial state.

With the 6-months moratorium in hand, you can keep your worries about your mortgages at bay - at least for now. The moratorium initiative by Bank Negara Malaysia (BNM) was set to keep ‘panic-selling’ tendencies low, and keep holding powers up. This is simply because it gives people the option to financially stabilise themselves in the next 6 months, especially if they’ve been heavily affected by these uncertain circumstances.

Because the market is soft, it’s hard to predict that you will be able to sell at a price you want. Some options to consider would be to sell your property at 10% to 20% below market rate. Do your research, scavenge the internet to see what’s the average asking prices, and appoint a property agent/negotiator you trust to help you figure it out.

Be that as it may, if you do have holding power over your assets, which means if you can still afford to keep your property, it’s highly encouraged that you keep it especially if you’re looking at it from an investment point of view. 

In conclusion, while Covid-19 does affect the livelihood of Malaysians nationwide, especially these times of uncertainties; we need to be more vigilant, and keep ourselves informed. Do not surrender to the scare and fear tactics the media often portrays. If you have been thinking about buying or renting a property for awhile now, it is not necessarily a bad time to start investing. All you need to do is get the right information, do your research or talk to a property expert on what your options are.

If you’re still worried about buying, renting and/or selling properties however, you can park your worries aside with the PLOT app. Designed to maximise your property journey, the app’s algorithm matches you to the right property and the right agent based on 100% genuine user ratings.

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