Demand for affordable housing remains strong

Intent is there but decision to buy may be impacted by factors such as economic uncertainties, interest rates: PropertyGuru

KUALA LUMPUR: PropertyGuru Malaysia’s biannual Consumer Sentiment Study (CSS) for H1 2024 revealed that 30% of respondents are looking to purchase a property in the next two years. Among this group, 60% are considering purchasing a home valued at RM400,000 or lower, particularly low-income and younger Malaysians.

Country manager Malaysia (PropertyGuru.com.my and iProperty.com.my) Sheldon Fernandez said that the study showed continued strong demand for affordable housing, particularly among low-income earners and young families.

However, he added that the PropertyGuru Malaysia Property Market Outlook 2024 showed a quarter-on-quarter decline of 7.4% in the Sale Demand Index in Q4’23 which suggested that while the intent to purchase is there, the actual conversion may be impacted by various factors such as economic uncertainties and rising interest rates.

“Our study also shows that 60% of respondents agreed that the increase in the service tax rate, as introduced in Budget 2024, will affect the cost of property purchase. This will lead to buyers becoming more pricesensitive and cautious in their purchase decisions. Moreover, high asking prices has steered buyer interest towards the rental market. The rental trend has sustained strong demand throughout 2023 and is anticipated to increase in the near term.

“As the market evolves, it is crucial for industry players to understand current consumer preferences and trends. This will enable them to customise their property offerings and contribute to the development of more affordable housing for Malaysians,” he said.

Aside from financial concerns, Sheldon said potential homebuyers expressed worries about the delays in projects (65%) and low construction quality (64%) when considering a newly launched property. These concerns highlight the importance of project management and quality control, and the need for developers to address these issues to attract potential buyers.

“According to the Ministry of Housing and Local Government, 481 sick projects and 112 abandoned projects has been identified across the country as of June 2023. Therefore, it was not surprising to see that 66% of respondents are calling for better enforcement by the authorities to ensure the highest compliance during the defect liability period. In a similar vein, 66% expressed the need for the establishment of Developers Guarantee Fund to protect buyers against loss of funds due to bankruptcy or fraudulent activities by developers.

“These findings underscore the need for stronger policies to safeguard the buyer interest and boost confidence in the property market,” he added.

When questioned on which housing initiative is perceived as the most useful, the 1Malaysia Housing Programme (PR1MA) is the preferred choice for 23% of respondents, particularly those who are middle-income earners in their 30s. On the other hand, Rumah Selangorku is favoured by 15% of respondents, predominantly those who are married with children.

Lastly, the Projek Perumahan Rakyat is chosen by 14% of respondents, mainly those from the low-income bracket. This finding emphasises the need for the government to tailor housing initiatives to meet the preferences of diverse demographic groups. They should also collaborate with financial institutions to offer advantageous loan rates and conditions, and to periodically update policies to address upcoming housing needs.

Among renters or those intending to rent, 59% expressed that rental payments should be factored into their credit score as this could provide an opportunity for potential homeowners to establish a robust credit profile, particularly when it comes to repaying debts.

“Considering that many young Malaysians might not have liabilities such as hire purchase or student loans, their credit histories could be viewed as limited. This initiative could help them enrich their financial profiles,” Sheldon said.

To bring down the selling price of residential properties, 37% of lowincome respondents and 40% from middle-income households are willing to forgo certain amenities. These include a yoga deck (42%), jacuzzi (38%), tennis court (29%), swimming pool (24%), gym and designated parking lot (23%).

Meanwhile, 62% of respondents, more so among the middleincome, believe that homes with green features will help reduce properties’ operational costs in the long run.

Sheldon said 50% of those intending to purchase a home after one year or those with no purchasing intent, have plans to rent in the future. This is especially predominant among younger Malaysians. Among those intending to rent, 69% allocate a monthly rental budget of RM1,500 or lower. Meanwhile, more than 90% of existing renters are paying the same amount and 35% low-income earners paying less than RM500 per month.

When it comes to regulatory expectations surrounding the rental market, 53% of all respondents support the government’s inclusion of the Rent-To-Own scheme in the Mid-Term Review of the 12th Malaysia Plan. This scheme allows renters to build equity over time and eventually own a property for those who are unable to afford the upfront costs of buying a property. Digging deeper into the reasons for this agreement, 36% cited the inability to save for a downpayment as a key factor. This scheme might help promote affordable rental options that cater to renters’ financial needs while allowing them to gradually transition into homeownership in the future.