STRONG PROPERTY INTEREST BUT LACKS EFFECTIVE DEMAND - PROPERTYGURU

Interest in property purchases remains high in Malaysia despite the higher cost of living, financing constraints and affordability, PropertyGuru Malaysia said.

In its Consumer Sentiment Study (CSS) Second Half 2023 (2H2023), country manager Sheldon Fernandez said about 50% of those surveyed, particularly the younger and lower-income demographics, rely on government support to purchase a home.

"Moreover, 46% of the respondents said they have ongoing challenges to get financing for affordable housing schemes,” he said. 

Fernandez said it is essential to plan and execute affordable housing initiatives strategically to suit today's lifestyle, particularly in urban areas as there are also growing concerns about sustainable living environment conditions. 

He also said respondents were ready to compromise on certain amenities in exchange for more affordable housing to meet their homeownership aspirations.

He said respondents, mainly older individuals and renters, were happy to forego amenities such as gyms (49%), playgrounds (46%), jogging tracks/recreational spaces (45%) and balconies (43%) if this leads to a lower price tag but they were not ready to compromise on parking spaces, functional kitchens and second bathrooms.

This shift highlights changing consumer preferences where practicality and cost savings are prioritised. 

"There is room for regulators and developers to play a role in this, knowing that people are willing to forego some amenities but not on sustainable living," Fernandez said.

He added that there has been a fall in home loan applications and expects slower transaction activity in for the rest of the year. The fall in sales (transactions) would also mean a rise in rental rates.

“If people are not buying, they are renting,” he said.

He hopes the situation will stabilise as the economy improves. This would revive property demand in 2024. 

"We are hoping for some good news from the progressive wage policy that will be tabled in Budget 2024. It may be the support Malaysians need to bring them closer to homeownership," said Fernandez. 

In response to the overnight policy rate (OPR) hikes and resulting higher borrowing costs, he said 35% of respondents said they would be looking at cheaper properties, 51% planned to save more and 23% opted to delay their first purchase to next year. 

"This underscores a willingness among potential homebuyers to recalibrate expectations and to consider options that align with their financial capacity," he said. 

With the OPR rate at 3% and inflation easing to 2%, he said it is timely for the government to conduct a review of current and proposed housing schemes and initiatives. 

"To help consumers overcome the current homeownership barriers, targeted and agile government assistance is crucial to accurately tackle challenges.

“We're looking forward to seeing what the Budget 2024 have in store for aspiring homebuyers,” Fernandez added. 

The survey polled 1,000 respondents on property and property-related issues via an online questionnaire. 

Respondents comprised a mix of white- and blue-collar personnel and businessmen from the mid to high-income segment (64%) and low-income group (34%).