The housing index in Malaysia rose by 0.80% in the fourth quarter of 2021 as per reports by Trading Economics. However, things were in the hindsight just in the previous quarter. As per the National Property Information Centre (NAPIC), Malaysia was nursing a drop of 0.7% in the third quarter of 2021 compared to the third quarter of 2020 with the average price of houses standing at RM 428,458.

Looking at the quarterly movement of house prices, the price index dropped as follows from the second quarter of 2020 to the third quarter of 2021:

• Terrace house price index dropped by 1%. Its price drop is the lowest compared to other types of housing with the current average price at RM 408,753.

• The detached house price index dropped slightly more, at 2.5%, with the current average price at RM 621,124.

• The high-rise buildings’ price index dropped at 2.9%, which is close to that of detached houses. Now, such houses have an average price of RM 332,333.

• The largest dip in house prices is taken by semi-detached houses at 3.6%, currently with an average price of RM 643,262.

“But the fourth quarter seemed to have done a serious turnabout as the year 2021 finishes at a high note with a 0.8% increase in house price. This means within just 3 months, the property market’s price appreciated by 1.5%.”

Does this mean developers sold properties more aggressively during the last two quarters of 2021?

Source: National Property Information Centre (NAPIC)

Looking at the volume of transactions, it can be seen that sales have picked up significantly in the third quarter of 2021 with an upward trend, which followed through the fourth quarter. Where the transactions were dipping at 26.8% in the second quarter of 2021, it turned around to a positive 3.8% increase in the third quarter.

This indicates the developers geared up in the last two quarters of 2021 and made some significant sales amid the threat of the new variant of Covid, Omicron. The ongoing phases of border reopening and business operations also boosted positive sentiments among customers. More people felt comfortable buying a home as they could foresee a brighter 2022. So, developers could ramp up with more promotional offers and incentives to generate more sales in late 2021.

What played as the catalyst for increased sales in 2021?

Digitisation played a vital role in boosting sales of properties amid the pandemic.

• Virtual viewing gave access to people to view properties from the comfort of their homes.

• Developers could easily list their properties in online portals, and property buyers could access the portal and choose the right one for them from a pool of infinite choices.

• Communication and meet-ups via Zoom and Webex became the new normal.

On the affordability front, the Housing Ownership Campaign (HOC) served as the catalyst for increased property sales. Stamp duty exemption for residential houses between RM 300,000 to RM 2.5 million helped generate positive sentiment among home buyers amid the pandemic’s uncertainties.

Previously, HOC succeeded in generating RM 23.2 billion sales in 2019, surpassing the Government’s initial target of RM 17 billion as per reports of Business Today. This helped the property market to address the overhang property issue vastly.

Then again, it was introduced in June 2020 to boost the morale of home buyers. Just like before, it brought about a positive outcome. Since HOC’s reintroduction, 34,354 residential houses were sold as of 28 February 2021, cumulatively valued at RM 25.65 billion.

What does this say about developers’ profit trends?

1. UOA Development Bhd sees a 53.5% increase in revenue.

UOA Development Bhd delivered the highest return on equity (ROE), beating their peers for 3 consecutive years. According to The Star, their net profit on 30 June 2021 more than doubled to RM 54.35 million from RM 23.18 million in the previous corresponding period. Their revenue increased by 53.5% at RM 216.28 million.

Due to 2021 being more restrictive from the movement control order (MCO), 2022 poses a better prospect for growth. As such, they foresee an upward trend in their profit in 2022.

Besides, UOA launched RM 1.05 billion worth of new projects:

• • Desa 3 landed properties with a gross development value of RM 18 million.

  • Laurel Residence in Bangsar with a gross development value of RM 550 million.

  • Sri Petaling Phase 2 with a gross development value of RM 480 million.

UOA expects that these new launches will contribute to their forecasted upward profit trend in 2022.

2. Mah Sing saw a rise in their M-Series homes with a 54.7% rise in profit.

Mah Sing Group Bhd is another developer that saw an increase in profit by 54.7% from the third quarter of 2020 to the third quarter of 2021. Their profit margin in this one year increased from RM 25.96 million to RM 40.17 million.

In the first 9 months of 2021, Mah Sing also achieved RM 1.28 billion of new property sales, which is a 51.1% surge compared to the same period the previous year.

In a statement with the New Straits Times (NST) on 30 November 2021, Mah Sing stated that they observed an upward trend in property sales. The highest in demand were their M-Series affordable high-rise buildings in the central business district and landed properties in strategic locations.

3. EcoWorld Malaysia, a subsidiary of an international property developer, also saw a 14.1% profit jump.

According to The Star, EcoWorld Malaysia, a global developer with business in Malaysia, also experienced a 14.1% jump in net profit. Their profit increased from 160.15 million in 2020 to RM 187.74 million in 2021.

The Group said that their profit is led by strong sales and good progress on site despite the obstacles faced due to the pandemic restrictions. Hence, they also foresee an upward profit trend in 2022 considering this year, Malaysia is more in control economically and financially. Besides, the country has a better handle on managing business operations amid the pandemic.