More data needed for property rental market

‘Real transacted data for rental is essential to ensure that the market remains competitive’


Any proposal to push for rental instead of house purchases must take into account the real data to avoid what could be another disastrous mismatch between rates and consumers’ income level.

Khazanah Research Institute director Dr Suraya Ismail said real transacted data for rental, which is not available at the moment, is essential to ensure that the market remains competitive.

“Generally, for consumers who are looking to rent at this current period, I urge them to evaluate their net-toincome ratio before proceeding as they need to be aware with what they are getting themselves into.

“They must conduct an intense evaluation on the differential ratio in long-term expenditure between renting and the conventional method,” she said at PropertyGuru Malaysia’s 2018 Property Outlook Forum in Kuala Lumpur yesterday.

Rising house prices in key cities have made house purchases almost impossible to many Malaysians. The central bank recently released data that about 130,000 homes are left unsold. Bank Negara Malaysia pointed to the high price of these houses for the glut. The central bank had also blamed developers for not building houses that reflect the market demand, especially for units that cost about RM250,000.

Due to the pricey house prices, the authorities had recommended the public to rent instead of buying the house. The government had also allowed a 50% tax exemption for rental rates below RM2,000.

But the mismatch between the affordability level and house supply was the reason behind the present glut.

Suraya said the rental market should complement the house buying market and should not be an alternative to substitute home-ownership totally.

“If we are to take the rental market seriously, then the asking rental prices needs to be affordable too, whereby sufficient data to evaluate buyers’ house-to-income ratio is required to avoid any long-term issues,” she said.

According to PropertyGuru’s Market Outlook Report for 2018, the rental market is expected to grow due to unaffordability and changing lifestyle.

The younger generation are also more likely to opt to rent a house.

“In the next five to 10 years, the rental market may become crucial to the property market as the buy and sell market.

“The traditional belief of owning a home will be significantly challenged and all stakeholders are advised to take note of this trend.”

The real estate sentiment for next year is expected to be challenging, despite the stronger economic fundamentals in 2017.

“Though overall consumer sentiment has improved — and asking prices have come down — the key themes of price unaffordability overhang on high-rise homes, rise in living costs, tight financing and other factors will have a dampening effect on the overall momentum in 2018,” it noted.

PropertyGuru country manager Sheldon Fernandez said despite higher gross domestic product (GDP) projected for 2017 and a recovery in crude oil prices, the property industry is still hampered by various factors.

“Higher GDP does not necessarily mean higher wages and disposable incomes for the below 40 and middle 40 segments.

“Properties remain out of the reach of many Malaysians due to the gap between asking prices in both the primary and secondary markets and consumer affordability,” he said.

“Next year — properties are expected to remain unaffordable at 4.4 times the median income in Malaysia, whereby the number would be even higher in key urban locations such as Kuala Lumpur and Penang,” he said.

The property portal’s search data also revealed that there has been significant decline in interest for condominium developments since May 2017.