PETALING JAYA: With the economic storm clouds stirring on the horizon, the Malaysian property market which has seen a nascent recovery this year can expect to face challenges in 2023.
Although there has been gradual improvement in sentiment with overall transaction prices in the first half (H1) of 2022 recording a higher trend compared to the previous year, Malaysians are still showing cautious behaviour as they await possible revisions of Budget 2023, reports PropertyGuru.
With affordability remaining the crux of the issue, and with a significant portion of the country’s population consisting of millennials, these young home seekers will likely shape the market in the coming years.
According to PropertyGuru’s consumer sentiment study (CSS) H2 2022, the country’s affordability ratings dropped seven points to 56 in H2 2022 from H1 2022.
More than half of the individuals surveyed do not qualify for government affordable housing schemes and are not able to purchase property without financial assistance.
CSS H2 2022 also revealed that two in three respondents would have bought a property if the Home Ownership Campaign (HOC) was extended.
Four overnight policy rate (OPR) hikes by Bank Negara Malaysia (BNM) this year and expectations of further increases in 2023 are certainly not helping anyone. As such, millennials would need to rely on some form of government assistance to transition into home ownership.
New housing concept for millennials
Center for Market Education fellow Consilz Tan told FMT Business the housing market should be relooked not only from the standpoint of housing affordability but also the consumption choice of millennials. This group prefers job mobility which could lead to a new lifestyle of “co-living”.
“The co-living concept is still quite new in Malaysia but we are starting to see some changes in the market,” she added.
Co-living is essentially a concept where households share communal facilities and arrange social activities for the residents. As demand for such affordable housing grows, this is a niche forward-looking developers can tap for the benefit of young Malaysians and the property sector itself.
She adds the rent-to-own (RTO) schemes have also been working well, and more financial institutions should get involved to help those who fall in this segment to become homeowners. Such schemes include Maybank Islamic’s HouzKEY, PR1MA central homes and Selangor’s Skim Smart Sewa to Ownership (2STAY).
On the sector’s outlook, Tan says, “The market is looking good with the positive trend in the volume of transactions, and there is a jump of 12.6% from Q2 2022 to Q3 2022 (93,466 units to 105,204 units) where residential accounted for the biggest share (RM25.03 billion).”
Although there is a dip (-2.1%) in the Malaysian House Price Index from Q2 2022 to Q3 2023, this could be due to the political uncertainty in the previous months, she said.
“With the conclusion of the 15th general election and the establishment of a new government, we should be able to see more stability in the markets and a slight increase in the index point in Q1 2023, hovering around an increment of 0.5%,” she added.
Socio-Economic Research Centre executive director Lee Heng Guie told FMT Business the housing property market is expected to remain challenging given the prospect of weak economic growth.
“Home ownership among those working and staying in the urban areas has been an ongoing concern as their income growth can’t catch up with home prices while having to cope with the rising cost of living,” Lee added.
A pessimistic perspective
Some industry players have a more pessimistic view of the property sector’s prospects. A property valuer told FMT Business there’s “an oversupply of property, the economy is slowing, and inflation is soaring”.
For 2023, those who can afford to buy properties would be those in the top 5% of the country, he states.
“The financial crisis in 2008 was American-made, but today it is Malaysian because 90% of Malaysians are heavily indebted due to housing and business loans. Properties over the last five years were bought at very high values as it was during a boom.
“From 2019 onwards and after the pandemic, the economy has slowed and property prices have begun to slide. And with high inflation, families are finding themselves torn between putting food on the table whilst servicing their mortgages.
“Expect to see a repeat of 2008’s housing crisis but worse,” said the valuer, who preferred to remain anonymous. - FMT
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