KUALA LUMPUR (Sept 4): Penang’s residential property market was the second-best performing market in Southeast Asia with an annual growth of 5.6% in the first half of 2023 (1H2023), according to Knight Frank in its recently released “Asia-Pacific Residential Index for 1H2023” report.

The report, which tracks the movement of average residential prices within the Asia-Pacific region across 25 cities, showed that 14 cities recorded positive annual price growth in 1H2023, where Singapore ranked first at 8% while the average residential price growth within Asia-Pacific stands at -0.2%.

In a statement issued on Monday (Sept 4), Knight Frank Asia-Pacific head of residential Victoria Garrett said: “After the bull run in home values over the past few years, prices plateaued six months into 2023, indicating that correction is taking place in more markets. With rate hikes being paused, buyers are utilising this window of opportunity to lock down on their dream homes, which is notably predominantly seen in Australia, New Zealand, and India. While the high inflationary conditions plough on, the combination of limited housing supply, restricted new constructions and robust household formation will support prices in various markets.”

Meanwhile, Knight Frank Asia-Pacific head of research Christine Li commented that the Asia-Pacific region maintains a balanced outlook, adapting to global challenges while showcasing resilience in key markets.

“Steady sales momentum, positive year-on-year growth in select markets, and buyer confidence in the face of diminishing affordability underscore the region’s promising outlook. As we move forward, the rate of price deceleration in Australasia could start to restore confidence in the Australian and New Zealand markets, while the rise in income levels, coupled with a strong aspiration for property ownership, will sustain demand in emerging markets such as India and Malaysia,” Li noted.

In Malaysia, Kuala Lumpur saw its prices grow by 0.34% year-on-year while prices in Penang rose 5.78%, with Penang being the second-best performing city in Southeast Asia.

Commenting on Malaysia's residential market performance, Knight Frank Malaysia’s senior executive director of research and consultancy Judy Ong said, “Despite a slowdown in the economy with GDP (gross domestic product) recorded at 2.9% in 2Q2023 (1Q2023: 5.6%), the recent pause in OPR (overnight policy rate) hike coupled with improving labour market conditions (unemployment rate at 3.4% in June 2023) will continue to support the housing market. Improvements in road and rail links will underpin demand for well-conceptualised residential products in key cities and moving forward, prices are expected to hold steady.”