THE MALAYSIAN RESERVE. 16TH DECEMBER: Rising interest rate is another factor causing the Malaysian population not able to become home owners
The Malaysian housing affordability would possibly be affected if interest rates continued to rise further, DataSense head of real estate intelligence Dr Nai Jia Lee said.
Speaking at the PropertyGuru Malaysia’s Property Market Outlook 2023 webinar, Lee said the housing segment needs to rely on government assistance to transition into home ownership.
“Interest rate is expected to be a key part of their (homebuyers) decision and a key part of the conversation that we expect to continue into 2023,” Lee said.
He noted that the housing affordability issue may persist since the government’s Home Ownership Campaign (HOC) has expired.
“In our survey, the respondents said they would have bought a property if the HOC was extended.
“This is the type of affordable constraints that we see the most,” he said.
According to him, a significant portion of the Malaysian population consists of millennials, most likely to be home seekers that could shape the market over the next five years.
Meanwhile, the country’s housing affordability rating also dropped seven points to 56 in the second half of 2022 (2H22) from 62 in 1H22, based on PropertyGuru Malaysia data.
The data saw that many individuals find that they are not qualified for government affordable housing schemes, and are not able to purchase property without financial assistance.
“This showed the instability that homebuyers are currently facing and the significant downtrend in purchasing confidence as a long-term result of the pandemic,” it said.
However, Lee opined that the government will be in burden if they continue to offer HOC with the country’s financial condition — higher debts and lower revenues — especially if the interest rates continue to rise.
“Giving up more money and making housing more affordable may backfire because the country could end up with more debt.
“I think the government will probably be picky about all of these because balancing the budget is a key here,” he said.
The analyst views that the government could be offering something similar to HOC but at a lighter version.
Amy Wong of Knight Frank, on the other hand, sees that HOC won’t bring much change to the issue.
“Perhaps the government could offer incentives for homebuyers to purchase greenhouses or houses with sustainability features to encourage people to purchase houses,” she said.
Lee also on the same views that the government should offer incentives for green buildings that could overcome the overhang property issues in Malaysia.
“This will be definitely something that we should be given because there is always a premium when it comes to green infrastructure and more costly for the developers to undertake it,” he added.
On the outlook, PropertyGuru country manager Sheldon Fernandez foresees that the property market will continue to face challenges as it moves towards recovery in 2023.
He said this is due to vast uncertainties in public policy, federal incentives and economic prospects.
“While we’ve seen gradual movement in recovery with the overall transaction prices in 1H22 recording a higher trend compared to the previous year, we are also seeing cautious behaviour as Malaysians await possible revisions of the Budget 2023,” Fernandez said.