HOMEBUYERS are being bogged down by issues of affordability, the inability to secure loans, job security and overall economic instability when it comes to purchasing a home, experts said.

The Malaysian Institute of Estate Agents (MIEA) president Chan Ai Cheng said these factors are plaguing the market, but there has been a slight improvement from last year.

As for rental prices, they have remained stable while the purchases of new properties have gone up.

“Since there are so many discounts available for first-time homeowners, they would rather buy new properties rather than (buy a) subsale (property) so they can avoid spending on a down payment,” Chan said. 

The trend also shows that purchasing power has declined, leading to more people renting instead of buying, she said.

“Under the current economic conditions, everyone is under pressure. Even when renting, the condition of the home depends on the goodwill of the landlord.”

Chan said real estate agents have noticed that landlords are not willing to renovate their houses or offer tenants their old furniture.

The cost of repairs to the home is borne by the owners, therefore reducing rental prices, she said.

“If owners renovate and completely furnish the home, people will rush to rent it. Those who are unwilling to do so may see their homes in the rental market for six months with no takers,” Chan said.

Data from PropertyGuru showed that the Rental Price Index saw an increase of 1.22% in the first quarter (Q1) of this year, accompanied by a 1.96% year-on-year (y-o-y) rise.

In tandem with this, the Rental Supply Index also registered an increase of 1.68% quarter-on-quarter (q-o-q) and 1.15% y-o-y in Q1. This reflects an upward trend for rental property, brought about by a notable increase in demand. 

The Rental Demand Index captures this as a 4.62% q-o-q increase in demand among home seekers in Q1. From a yearly perspective, the increase is even more pronounced, with a massive 93.27% y-o-y hike in rental demand.

As for the commercial property market, Chan said the rental market in this segment has been sluggish.

Many businesses are now reevaluating the need for an office in efforts to save money, Chan said.

“Many businesses will think about how to save on rent. For example, they could have 10 branches previously, but now there are only five. They can switch to working online without needing more office space.”

National House Buyer Association Chinese division head Tan Chong Leng advised people to rent first if they don’t have a good plan in place to purchase a property. 

“They should only do so when they have the financial capability. Otherwise they might have trouble paying the mortgage. 

“That may lead to their home being auctioned off, or worse, they may be sued by the developer and end up filing for bankruptcy,” Tan said.

KL life stressful for youth

Jason Mok, 24, moved from Penang to Kuala Lumpur two years ago after graduating with the hope of buying property in the city.

With what he earns, it is only enough for food, clothing, rent, and savings. 

“Originally I rented a small room for RM400. During the lockdown, I had no income for three months so whatever money I had was only enough for rent and food.”

While he can save on food, clothing and housing, travelling around the city means he needs to spend on fuel, toll and parking. 

After the lockdown, his income was slashed by 20%, but the cost of living has risen significantly. 

“The environment at my current rental isn’t good, but I have no money to afford a new place,” Mok said.

Alwi, an e-hailing and p-hailing rider in KL, shared that he could earn up to RM3,000 a month, but his living expenses have gone up.

“I rented a room for RM380 and gave my family RM1,000 a month. Now, I only give them RM800,” Alwi said.

He said he had considered moving out of KL but there aren’t any stable jobs available anywhere else.

According to the Youth Capital Market Survey 2020 by the Securities Commission, a large portion of the Malaysian youth’s income is spent on food, household expenses, and debt repayment, leaving them with not much left for savings or investments.

Building wealth and investment was only a priority for one-third of the sampled population.

The others viewed having emergency funds, establishing savings to support their families, and paying off debts as their priorities.

Respondents said they would put their income towards emergency funds and savings earlier in life and would only focus on retirement at a later stage. – August 1, 2022.