Malaysia’s property market has been declining since 2012.

There is more
positive news came out of 2019 than in 2018. Malaysia’s property market gained
traction as transaction activity in 3Q 2019 went up by 5.6% to 83186 transactions and
4.7% to 34.7 billion respectively from the same time last year. There are several
factors influencing demand in each state in Malaysia.

The increasing or deceasing of population in Malaysia affects the demand of

houses directly. When the number of population increase, the demand of goods will
also increase. Based on the figure 1, the highest number on property transactions by
state is Selangor which recorded 64,269 units and second highest is Johor which
recorded 33,651 units. Population distribution by state indicated that Selangor was the
most populous state, followed by Johor. As for W.P Putrajaya and W.P Labuan, it is
recorded 373 units and 240 units respectively. This is because least populated states
were W.P Putrajaya and W.P Labuan.

Number of households is the one of the factors which will influencing demand
to the property market. A rise in income causes the demand of the housing market
become increase. When the consumer’s income increases, generally the consumer will
spend more money to buy house or have higher chance to buy a house. For example,
WP Kuala Lumpur is the capital city of Malaysia and it recorded 15,751 units of
transactions. This is because the average household income level in Kuala Lumpur is
almost twice as high as the rest of the Malaysia.

Next, is demographic characteristic. The average household size has decreased

for a number of reasons, such as later marriage, fewer children and increased
incidence of separation and divorce. This increases the demand for housing for a
given population. Demographic projections are for this to continue, with lone person
households expected to increase at a much faster rate than family and group
households. In Melaka, the property transaction is recorded 9359 unit. This is due to
Melaka is one of the most popular cities among tourists. In Negeri Sembilan, it is
recorded 14,623 units. This is because Negeri Sembilan is rather unique compared to
other Malay varieties. As for East Coast which is Kelantan (4,725 units), Terengganu
(12,583 units) and Pahang (12,147 units), these states are also influencing demand of
property transaction due to demographic characteristic. In addition, the smallest state
in Malaysia is Perlis which is recorded 1,218 units.
 Income, affordability and purchasing power is also the factor that will
influencing demand to the property market. An increase in income means that people
can afford more housing expenditures. During the period of economic growth,
demand for housing tends to rise. In addition, housing demand is often a luxury. As a
result, an increase in income leads to increase in demand. Based on figure 1, Pulau
Pinang, is recorded 17,700 units, Sarawak (11,228) and Sabah (5391). This is all of
them considers as one of the most expensive cities to buy property in Malaysia.
People who live in these cities is depend on their income. If their income is high, then
the purchase power will also high. In Perak, the property transaction is recorded
28,123 units. Perak government has launched the first phase of the “Perakku” housing
programme which is comprising low-cost; low- and medium-cost; and affordable
housing. So people who live in Perak will buy a house based on their affordability. In
Kedah, the number of property transaction is recorded 14,844 units. This is because
state government had completed 28,082 of the 40,000 units it had targeted to build in
Kedah from 2013 to 2018, adding that the completed units include affordable and
low-cost homes.

In conclusion, the demands of the houses in Malaysia are affected by some

different factors. However, it’s not only in Malaysia, there is also same situation in
the other countries. The consideration of many aspects will be affecting the demand of
houses.