Is The Subsale Market A Safer Bet For Homebuyers Amid Current Uncertainties?
The conflict in West Asia, initially seen as mainly affecting the energy sector, is now being described as a global supply crisis due to widespread disruptions across international trade networks spanning all industries.
What began with rising global fuel prices and energy supply disruptions across much of Asia following the outbreak of the conflict on Feb 28 has now evolved into a broader strain on global supply chains. This has, in particular, led to higher prices of goods and services, driven by escalating logistics costs and mounting inflationary pressures.
The impact is also being felt in Malaysia, especially among industry players, even though most citizens benefit from fuel subsidies. The construction sector, for example, is reportedly facing a 30 to 40 percent increase in building material costs, with significant implications for housing and infrastructure projects.
This situation is likely to expose buyers of new homes – whether currently under construction or to be built later – to greater financial burdens and potential project delays. Against this backdrop, some see the secondary property market as a more attractive alternative for prospective homebuyers.
But how accurate is this perception?
WILL THERE BE AN IMPACT?
Elaborating on the current situation, urban planning expert Dr Mohammad Mujaheed Hassan said from a market mechanism perspective, the rise in fuel prices triggered by the West Asian crisis does not stop at higher logistics costs, but will spill over into other sectors.
The senior lecturer in urban and regional planning/community development at the Department of Social Science and Development, Universiti Putra Malaysia, said consumers are already feeling the effects through weakened purchasing power as prices of goods and services climb.
“When inflation rises, some households become more cautious about making long-term commitments such as buying a home. However, this does not mean the housing sector will be adversely affected overall,” he said, adding that based on data from the National Property Information Centre (NAPIC), Malaysia’s housing market is still moving, although performance varies by state, region and subsector.
He also dismissed the notion that the country’s construction sector would be significantly impacted, but noted that developers may become more selective about future projects, particularly in areas where demand has yet to be firmly established.
Mohammad Mujaheed added that uncertainty in West Asia could influence the interest rate environment and the cost of housing financing.
“In an environment where financing costs are potentially higher than before, purchasing ability becomes more constrained for certain buyers, especially in price-sensitive segments,” he said.
SECONDARY MARKET
On suggestions that buyers should consider purchasing subsale (second-hand or preowned homes) properties instead of homes still under construction, Mohammad Mujaheed said the decision ultimately depends on the buyer’s financial capacity and the property’s location.
“In a more cautious market environment, there is a tendency for sellers to be more flexible on pricing and negotiations, particularly in areas with a high number of listings. This gives buyers some advantage in securing prices closer to the real market value compared to when the market is more active.
“However, this opportunity is more relevant for buyers with stable financial standing who are purchasing for owner-occupation. In such cases, the decision is driven by long-term needs rather than expectations of immediate gains,” he said.
By way of example, he said in areas with several subsale units possessing similar specifications, buyers can compare prices and negotiate to achieve better value.
However, he stressed that not every situation should be viewed as an opportunity.
If a purchase is made in an area with weak demand, oversupply or prices that are out of sync with market conditions, risks remain, even in times of crisis, he added.
“Likewise, if buyers commit beyond their financial means, any advantage gained through negotiation will not reduce long-term risk. Buying a subsale home during a crisis can present an opportunity for those who are prepared and financially disciplined. However, it requires careful evaluation as not all market situations offer the same advantages,” he explained.
Commenting on whether it is safer to buy a subsale home or a unit in a new housing project, Mohammad Mujaheed said amid the current geopolitical uncertainty, purchasing a house in the secondary market may offer a higher degree of certainty, though it is not necessarily better in all circumstances.
He said the key advantage of subsale homes is that they are already completed and can be assessed directly. Buyers are able to inspect the physical condition of the property, evaluate the surrounding neighbourhood, existing amenities and accessibility before making a decision.
“This reduces uncertainty compared to new projects that are still under construction or have yet to begin, where buyers must rely on plans and future projections. In addition, subsale home prices are generally closer to the current market value as they are based on actual transactions in the area.
“In uncertain market conditions, this clarity helps buyers make more rational decisions and reduces the risk of overpaying relative to real market conditions,” he said.
As for new housing projects, Mohammad Mujaheed said it is important to note that in Malaysia, such developments are still subject to a regulatory framework and oversight.
He also said that new projects do have their own advantages, including more modern designs, updated facilities and potential capital appreciation if developed in strategic locations supported by sound planning.
RISKS
Elaborating on the risks of purchasing homes during periods of economic uncertainty, Mohammad Mujaheed said such decisions must be assessed comprehensively because the risks involved go beyond property prices and extend to the buyer’s long-term financial capacity.
One key risk is the rising cost of living. As inflation increases, daily expenses such as food, transportation and utilities also rise, reducing disposable income available to service housing loans.
“This can put pressure on household finances, especially in the early stages of ownership. There is also the risk of income uncertainty.
“In an unstable economic environment, certain job sectors may be affected, potentially leading to reduced income or job loss. This directly impacts a buyer’s ability to maintain consistent loan repayments,” he said.
He added that another critical factor is financing costs, namely interest rates, which are determined by the monetary policy of Bank Negara Malaysia and may fluctuate in response to economic conditions.
“Any increase in rates will raise monthly repayments, particularly for floating-rate loans. Another risk is property depreciation, especially if the purchase is made in areas with weak demand or oversupply.
“In an uncertain market, property performance is not uniform, with some areas more vulnerable to price pressure than others,” he said, adding that buyers must also consider liquidity risk as property is not an asset that can be easily sold in the short term.
IMPACT ON PROPERTY MARKET
Meanwhile, senior lecturer at the Faculty of Architecture, Planning and Surveying, Universiti Teknologi MARA (Seri Iskandar campus), Dr Azizul Azli said the local property market is expected to experience three key impacts following the West Asian crisis.
The first impact will come from rising crude oil prices, which will place direct pressure on the national economy.
“When oil prices increase, it also affects the cost of construction materials such as steel and cement, as well as transportation. As all these costs rise, the cost of building homes inevitably increases.
“Second is labour costs. When prices of materials rise, wages also tend to increase, contributing to higher land prices.
“Third is transportation costs. In the construction sector, the cost of delivering materials such as cement and concrete can be high, especially when project sites are far from raw material sources,” he said.
As a result, the ongoing tensions are expected to impact new construction, including projects launched this year.
“We do not know what will happen three years from now. Landed housing projects usually take around 24 months to complete, while high-rise developments may take about 36 months. The uncertainty makes developers more cautious in planning their projects,” he told Bernama, adding that developers’ financial strength also plays a crucial role in ensuring smooth project delivery.
SUBSALE HOME ADVANTAGES
Viewing the secondary market as a strong option in the current uncertain economic climate, Azizul said it is more advisable to buy subsale homes, or acquire a house via an auction.
“The subsale market refers to completed homes. Buyers can physically inspect the property and ensure the location suits their needs. This makes subsale properties more secure and reassuring as the asset already exists.
“In terms of value, the subsale market also offers more options. For instance, buyers with a budget below RM500,000 can compare listings at RM500,000 or RM520,000. In some cases, sellers who wish to sell their houses quickly may offer lower prices, such as RM480,000. This creates opportunities for buyers to secure properties below market value,” he said.
Azizul added that based on property market reports by NAPIC and the Valuation and Property Services Department, there is an oversupply of about 19,000 completed housing units that remain unsold, commonly referred to as “overhang properties”.
“As such, my advice is to consider purchasing from the subsale market or buying a unit that is completed but unsold,” he said, also advising buyers to carefully consider the location before making a decision.
“Ideally, choose a location close to your workplace, with a commuting time of less than 60 minutes.”
