Wage growth could be lower or zero during the crisis, and the unemployment rate could be higher than any other period, says minister
by S BIRRUNTHA / Pic by MUHD AMIN NAHARUL
PROPERTY prices might not necessarily be more affordable post-Covid-19 due to market changes and wage growth, the housing minister said.
Housing and Local Government Minister Datuk Zuraida Kamaruddin said the economic crisis brought on by the Covid19 pandemic saw the housing market, labour and financial sectors going through adjustments.
As a result, she said wage growth could be lower or zero during the crisis, and the unemployment rate could be higher than any other period.
She said this could lead to negative household debt-servicing capacity.
“Banks are likely to tighten their lending conditions to reduce their exposure to a higher risk of possible default from mortgage payments, making it even harder for first-time homebuyers to enter the market,” Zuraida said at the 2021 Malaysian Housing and Property Summit yesterday, virtually organised by the KSI Strategic Institute for Asia Pacific.
Despite the lower risk appetite, on a macro level, she said the current monetary policy stance is believed to be “appropriate and accommodating” to support the housing market.
Hence, she said property seekers could enjoy low interest rates, which means lower barriers to financing and owning a property.
“Lower Overnight Policy Rate will allow buyers to lock in lower interest rates favourable to current financial standings, especially those finding it difficult to fork out higher monthly loan repayments,” she added.
Zuraida said the pandemic-challenged property industry saw more innovations on digital solutions.
She said more industry players stepped up their digitalisation initiatives last year to enhance their capacity to market products and engage with buyers via online platforms.
The minister added that interaction with sales representatives to facilitate a transaction with enhanced convenience would pave the future of how developers market and sell their units.
“This is a timely evolution given that millennials, who are accustomed to e-commerce habits, are now in mid-20s to late30s and represent the largest segment of the house buying market locally.
“This trend is expected to grow in 2021 and beyond, as developers and real estate agents begin to understand and embrace the advantage of a strong digital presence as a long-term strategy,” she said.
Zuraida said the reintroduction of the Home Ownership Campaign (HOC) had been a lifeline to the property market amid a challenging market induced by the pandemic.
She said the HOC campaign has boosted the country’s property market in 2019 and has been widely seen as an important lifebuoy for the industry throughout 2020.
Otherwise, she said the property market would have declined significantly without the property buying initiative.
She noted that the campaign would continue to drive property purchases amid a low-interest-rate environment on the back of the pandemic.
“Without the HOC campaign, market watchers agree that our property market situation might have been far worse than the comparatively flat performance witnessed thus far.
“The HOC is projected to play a more impactful role in resuscitating buyers’ interest. The good news is that the incentives will remain in play for the rest of 2021,” Zuraida said.
Besides that, she said the continued implementation of several mega infrastructure projects such as the Mass Rapid Transit Line 3 and the Pan Borneo Highway would boost the property industry.
She said these mega projects would indirectly complement upcoming residential and commercial developments within the vicinity and spur further development of rural areas, resulting in a huge economic lift.
She said they also give substantial multiplier effects on the property market, with positive price movement in established locations within the proximity.
“The creation of fresh property opportunities will open up new investment hotspots and provide socio-economic growth for the future,” she said.