30% Malaysians Aim to Buy Homes in 2 Years, Over 60% Budget Below RM400K

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“30% of Malaysian aim to buy houses within 2 years, with 60% budgeting below RM400K. 81% of Malaysians have faced challenges when looking for properties to rent.”

KUALA LUMPUR, 19th Mar 2024 – According to PropertyGuru, released its “Malaysia Consumer Sentiment Study (CSS) 2024,” revealing that 30% of respondents aspire to buy property in the next two years. Among them, 60% are considering purchasing properties valued at RM400,000 or lower, particularly low-income earners and young individuals.

PropertyGuru.com.my and iProperty.com.my’s Malaysia Regional Manager, Shylendra Nathan shared, “The Consumer Sentiment Study Report for the first and second quarter of 2024 highlights the continued growth in demand for affordable housing, particularly among low-income earners and young individuals. Despite the strong demand, according to PropertyGuru, the Malaysian real estate market outlook survey results showed a monthly decrease of 7.4% in the Sales Demand Index for the fourth quarter of 2023. This phenomenon suggests that while Malaysians have the intention to buy property, the actual property transaction volume may be influenced by various factors such as economic uncertainty and rising interest rates.”

Shylendra Nathan stated, “According to our survey, 60% of respondents agree that the increase in the service tax rate in the 2024 budget will affect property prices. This will lead to buyers being more cautious and sensitive to prices when making purchasing decisions. Additionally, high asking prices are prompting buyers to turn to the property rental market. The rental trend maintained strong growth momentum throughout 2023, and demand is expected to continue increasing in the short term. As the market continues to evolve, understanding current consumer preferences and trends is crucial for industry professionals.”

Home Buying Challenges

In addition to financial concerns, potential buyers express concerns about project delays (65%) and poor construction quality (64%) when considering purchasing new property projects. These issues highlight the importance of project management and quality control, as well as the urgent need for developers to address these concerns to attract potential buyers.

Shylendra Nathan added, “According to data provided by the Ministry of Housing and Local Government (KPKT), as of June 2023, a total of 481 distressed projects and 112 abandoned projects have been identified nationwide. As much as 66% of respondents call for stronger enforcement by authorities to ensure developers remain compliant during the defect liability period. Similarly, 66% of respondents express the need for the establishment of a ‘Developer Guarantee Fund’ to protect buyers from financial losses resulting from developer bankruptcy or fraudulent activities. These findings underscore the necessity for strengthened policies to safeguard the interests of homebuyers and bolster confidence in the real estate market.”

Affordability

When asked which government housing scheme was most practical, 23% of respondents, particularly those in their thirties with moderate incomes, favored the 1Malaysia People’s Housing Programme (PR1MA). Additionally, 15% of respondents favored the Selangor Affordable Housing Scheme (Rumah Selangorku), primarily among married couples with children. Lastly, respondents opting for the People’s Housing Programme (PPR) accounted for 14%, mainly from low-income groups.

The survey results clearly indicate the need for the government to adjust housing measures to cater to different preferences. The government may consider collaborating with financial institutions to provide more favorable loan rates and terms, and regularly updating policies to meet future housing demands.

These initiatives provide crucial support for fulfilling consumers’ aspirations of homeownership, but the research also reveals the challenges individuals face when applying for these schemes. Forty-six percent of respondents highlighted the most common challenge as difficulty in obtaining housing loans.

Shylendra Nathan further added, “Among tenants or those intending to rent, 59% believe that rental payments should be included in their credit scores. This would help potential buyers build a healthy credit profile, especially in terms of debt repayment. Many young people may not have debts such as installment payments or student loans, so the available data to assess their credit history is limited. Therefore, this measure can help strengthen their personal financial status.”

Meanwhile, 74% of respondents indicated a strong willingness to apply for the Home Credit Guarantee Scheme (HCGS) if the scheme could provide fixed mortgage rates. This underscores the government’s need to further enhance existing incentive measures to benefit prospective property buyers widely. Additionally, 66% of respondents also expressed a greater willingness to apply for HCGS if the application process could be simplified. If involving banks or financial institutions, 64% of individuals are also willing to apply. These survey results indicate that ease of use and convenience are the primary considerations for buyers when applying for housing.

Cost-effectiveness

37% of low-income respondents and 40% of middle-income households are willing to forego some conveniences for lower housing prices, such as a yoga studio (42%), a massage bathtub (38%), a tennis court (29%), a swimming pool (24%), a gym, and designated parking spaces (23%). Furthermore, 62% of respondents, including middle-income groups, also believe that in the long run, houses with green and environmentally friendly features help reduce the operational costs of properties.

Rental: Shift in Property Ownership Mindset

50% of individuals who plan to buy a house in a year or have no intention of buying a house intend to rent in the future, especially young people. Among those planning to rent, 69% allocate a monthly rental budget of RM1,500 or lower. More than 90% of renters are currently paying the same amount of rent (RM1,500), while an additional 35% of low-income earners pay monthly rental fees below RM500. The government must recognize that even those who do not consider buying a house or renters also face challenges in finding suitable accommodation within budget constraints.

Meanwhile, 29% of current renters are considering extending their lease by two years before buying a property. This is due to various factors such as insufficient savings for property acquisition (74%), rising property prices (33%), and the need to delay immediate property purchases (29%).

The study also found that among existing tenants and those looking for rental properties, 48% consider the 2+1 rental deposit policy requirements to be an economic burden, while 45% find it difficult to negotiate a reasonable rent. Relevant government agencies need to take intervention measures and policy actions to address these challenges, promote transparency in the rental market, and enable potential tenants to experience faster and more transparent transactions.

When asked about regulatory requirements for the rental market, 53% of respondents support the government including the Rent-To-Own scheme in the Mid-Term Review of the 12th Malaysia Plan. 36% of respondents believe that the key factor for the successful implementation of the Rent-To-Own model is that most people cannot save enough for the down payment on a property.

Shylendra Nathan summarized, “According to the research findings, it is evident that both the government and developers play crucial roles in meeting the evolving needs of property consumers. There is a significant surge in demand for properties priced at RM400,000 or below, and developers should focus on constructing more affordable housing projects, which may help in obtaining more support from the government in terms of incentives. Additionally, the government should reassess existing affordable housing schemes to enhance their effectiveness and ensure that these schemes are more attractive and easily accessible for consultation, thereby encouraging more potential buyers to apply. As sustainability gradually becomes a consideration for potential homebuyers, developers are encouraged to incorporate more environmentally friendly elements into their projects, which may help in obtaining tax incentives or other incentives provided by the government.”

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