iProperty.com.my 2020 Portal Demand Analytics An analysis of subsale residential property demand using iProperty.com.my’s user visits and subsale residential property listings data in Malaysia. iProperty.com.my 2020 Portal Demand Analytics - Subsale Premendran Pathmanathan General Manager – Customer Data Solutions, REA Group Asia Prem currently leads the data business in iProperty.com.my and together with his data team has produced property data analysis tools for property buyers and sellers, agents and developers. He provides regular talks on the Malaysia property market by demonstrating how to find value in property data. He is also the founder of brickz.my, a business that helped build a healthier property market in Malaysia by creating awareness on property prices. Foreword As Malaysia's No.1 property site, iProperty.com.my garners millions of visits each month. These real-time behaviours indicate where Malaysia’s subsale residential property demand (represented by user visits to the site) is, in comparison to property supply (represented by subsale residential property listings on the site). The iProperty.com.my Portal Demand Analytics aims to provide a macro view of current demand trends in the Malaysian residential market at a national level and for the top states based on user visits and property listing data on iProperty.com.my. In this publication, we analyse the visits to our listings for the complete year of 2020 to identify the demand growth trends in comparison to 2019. Growth in demand (indicated by an increase in user visits and/or a decrease in number of listings) is favourable from a selling standpoint. It means either more potential buyers coming into the market or less competition among current property sellers. On the flip side, a decrease in demand would benefit buyers, shifting the market in their favour. The demand data presented in this publication is a representation of consumer sentiments. Some searches might have been for research purposes only while others represent a genuine interest to buy properties in specific areas. ©2021 iProperty.com Malaysia Sdn Bhd. All rights reserved. 1 iProperty.com.my 2020 Portal Demand Analytics - Subsale De�initions Unique Visit : Based on Google Analytics tracking of unique visitors, where multiple visits by one visitor are counted as one unique visit Active Property Listing : Property listings on iProperty.com.my that were active for at least one day and had a minimum of 1 view. The property listings on iProperty.com.my are refreshed every day to provide current and active listings to property seekers Property Demand : The number of unique visits over the number of active property listings Organic / Direct Traffic : Based on Google Analytics tracking, organic and direct traffic are not obtained through paid services or other sites How was this calculated? Total # of unique visits Demand = Total # of active property listings 2020 Demand – 2019 Demand YoY Demand % Change = 2019 Demand Median PSF in H1 2020 – Median PSF in H1 2019 Capital Growth = Median PSF in H1 2019 Price , for high rise Build up size PSF = Price , for landed properties Land area Considerations • Only areas that have more than 350 listings were selected to negate the effect of any spikes. • Unique visits were used to prevent a single user from distorting the demand figures through multiple visits. • In the case where a single user visits multiple areas, the visit is equally weighted across the various areas and building types to maintain the uniqueness of the user. • All visits used in this publication are based on organic and direct traffic only. • Pricing is calculated for areas that have had at least ten property transactions within one year. • Median Per Square Foot (PSF) is used to calculate capital growth due to various built-up sizes being transacted. Data sources Data Type Source Review Period Median Price and Capital Growth Brickz.my/JPPH January to June 2020 Property Demand iProperty.com.my January to December 2020 Note: The data system from JPPH officially records a property transaction once the stamp duty for the Sales and Purchase Agreement is paid. Analytics is based on the data available at the date of publication and as the more recent data from JPPH has not been released yet, the median price and capital growth figures are as of June 2020. ©2021 iProperty.com Malaysia Sdn Bhd. All rights reserved. 2 National Overview iProperty.com.my 2020 Portal Demand Analytics - Subsale National Overview National Demand for Subsale The COVID-19 outbreak has thrown a wrench in Malaysia’s economic gears in 2020. The housing market was not an exception Homes in 2020 improves to to facing a slowdown, as many prioritise necessities over big ticket -1.3% from -2.5% in H1 2020 items such a property. User visits to iProperty.com.my were at its lowest figure in April 2020, just after the Movement Control Order (MCO) was imposed. Nevertheless, we saw property demand in Q2 recovering when the restrictions were relaxed. Thus, by the end of June, the national demand for subsale homes experienced only a slight decrease of -2.5%. This has since improved further to -1.3% by the end of 2020. On top of that, by December 2020, unique visits for subsale property listings saw an upward recovery of +85%. In November 2020, the country’s unemployment rate dropped to 4.8%. Even though this figure is still higher than the typical unemployment rate in Malaysia, it is indeed an improvement after reaching a crescendo in May at 5.3% Although the current property market outlook is somewhat bleak in line with the ongoing economic slump, we have not seen a huge crash in the market. This is mainly due to the support provided by the government in the form of easy financing – the Overnight Policy Rate (OPR) rate was progressively reduced four times in 2020 to its current 1.75%, which is the lowest value in over 15 years. We can expect a further reduction to the OPR in Q1 2021 by Bank Negara Malaysia to cushion the impact of MCO that was recently reimposed on 13 January 2021. Aside from helping to ease loan repayment, this has sparked interest in property purchases especially among middle- and upper-class households. Home loan applications improve in line with user visits In the H1 2020 Portal Demand Analytics, we observed that user visits improved during the RMCO phase and that could be due to the pent-up demand as a result of restrictions during the March to May 2020 stricter MCO. This growth appears to have carried its momentum in H2 2020, albeit with several small dips. The chart below compares user visits to iProperty.com.my with the value of home loans applied by Malaysian consumers (as provided by Bank Negara Malaysia's (BNM) Monthly Highlights and Statistics in November 2020). As we can see, the increase in property demand as indicated by iProperty.com.my visits and its subsequent trendline is somewhat aligned to the follow-through action of these visitors indicated by home loan applications. This indicates a genuine interest in property purchase by those hunting for properties online. Unique Visitors and Home Loans Applied Jan 18 18 Feb Mar 18 Apr 18 18 May Jun 18 Jul 18 18 Aug Sep 18 Oct 18 18 Nov Dec 18 Jan 19 19 Feb Mar 19 Apr 19 19 May Jun 19 Jul 19 19 Aug Sep 19 Oct 19 19 Nov Dec 19 Jan 10 20 Feb Mar 20 Apr 20 20 May Jun 20 Jul 20 20 Aug Sep 20 Oct 20 20 Nov Dec 20 Value of home loan applications Volume of user visits to iProperty.com.my ©2021 iProperty.com Malaysia Sdn Bhd. All rights reserved. 4 iProperty.com.my 2020 Portal Demand Analytics - Subsale As a side note, we have seen a reduction in user visits for lower-priced properties. And even though home loan applications have spiked, we do not see many of them being approved. The home loan approval rate in Malaysia reached its lowest point in May at 25% and as of November, it stood at 39%. Comparatively, the approval rate was at 44% in January 2020. A lower OPR may have given access to cheaper financing, but on the flip side, bank margins are also being squeezed. Coupled with the weak employment landscape, banks have adopted a more cautious lending attitude, leading them to be pickier with loan applicants. National Demand 1.3% of all property Year-on-Year Terrace House Condominium Apartment Service Residence 0.4% 6.8% 2.1% 7.9% Year-on-Year Year-on-Year Year-on-Year Year-on-Year Median Price Median Price Median Price Median Price RM280,000 RM490,000 RM250,000 RM490,000 PSF RM182 PSF RM408 PSF RM294 PSF RM589 2.6% 1.4% 0.9% 2.0% Capital Growth Capital Growth Capital Growth Capital Growth National demand includes the following property types: terrace houses, semi-Ds, bungalows, cluster homes, townhouses, condominiums, serviced residences, flats and apartments. The national demand for subsale properties in 2020 fell by -1.3% YoY. The demand for high-rise properties is down in tandem with prices while the demand for terrace houses remained positive with capital growth of +2.6%. ©2021 iProperty.com Malaysia Sdn Bhd. All rights reserved. 5 iProperty.com.my 2020 Portal Demand Analytics - Subsale Year-on-Year demand by capital city Alor Setar -31.0% Kota Kinabalu -8.3% George Town -11.9% Ipoh -3.7% Kuantan -7.7% Petaling Jaya -5.9% Shah Alam Johor Bahru 1.7% -22.0% KL City Centre -8.9% Kuching Seremban 0.9% -7.2% Melaka City -40.4% Major cities in Malaysia Location Demand Pricing Year-on-Year % Change Median Price PSF Capital Growth SHAH ALAM 1.7% RM417,500 RM337 3.5% SEREMBAN 0.9% RM230,000 RM150 10.6% IPOH 3.7% RM200,000 RM142 0.0% PETALING JAYA 5.9% RM760,000 RM445 5.1% KUCHING 7.2% RM380,000 RM162 10.6% KUANTAN 7.7% RM292,500 RM171 0.0% KOTA KINABALU 8.3% RM420,000 RM298 0.9% KL CITY CENTRE 8.9% RM610,000 RM712 11.0% GEORGE TOWN 11.9% RM274,000 RM387 8.7% JOHOR BAHRU 22.0% RM412,500 RM292 0.8% ALOR SETAR 31.0% RM280,000 RM142 0.0% MELAKA CITY 40.4% RM220,000 RM212 3.8% *Kota Bharu, Kuala Terengganu and Kangar are not included in the list as these cities have less than 350 listings each (refer to Considerations on Page 2) Among the major cities in Malaysia, only Shah Alam and Seremban recorded positive demands in 2020.