This is as homebuyers face difficulties obtaining loans as banks continue to be conservative about loan approvals
By S BIRRUNTHA / Pic by TMR FILE PIX
A SUBSTANTIAL increase in rental demand and sluggish home seeking activities observed in the fourth quarter of 2021 (4Q21), as homebuyers face difficulties obtaining loans in the current climate, according to PropertyGuru Malaysia.
The online property portal said its 1Q22 Malaysia Property Market Report (MPMR), gathered by PropertyGuru DataSense, registered a substantial increase in the Rental Demand Index in 4Q21, with a hike of 30.53% quarter-on-quarter (QoQ) and 57.91% year-on-year (YoY).
PropertyGuru and iProperty Malaysia country manager Shylendra Nathan said the Rental Demand Index, which represents the proportion of interested prop- erty renters based on inquiries for rental units listed on the Property- Guru website, is expected to grow further in the current quarter as consumers shift their focus from buying to renting.
He noted that the increasing demand for rental properties could be indicative of shifting priorities among home seekers who face difficulties in securing home loans in the current climate, as banks continue to be conservative about loan approvals.
“As such, potential homebuyers are temporarily putting their purchasing plans on hold to ride out this period of economic volatility.
“Instead, they are opting to rent homes to satisfy their upgrading needs or pursue their desired lifestyle improvements, while rebuilding confidence towards making large property purchases,” he said in a statement recently.
He added that the shift in consumers’ priorities is also reflected in MPMR’s Sale Demand Index, which registered a sharp drop of 36.56% QoQ and 7.7% YoY during the final quarter of last year.
He said factors that might have contributed to the sluggish home seeking activity in 4Q21, aside from difficulties in obtaining adequate financing and increasing focus on the rental market include consumers’ preoccupation with the year-end festivities and the recent flooding events which might have triggered home seekers to reassess their buying plans.
Meanwhile, Shylendra shared that the property market continued on a gradual trend of improvements overall, as captured by the MPMR 1Q22.
He noted that the Sale Price Index, which measures the confidence of sellers via asking prices listed on propertyguru.com.my, continued to inch upwards by 0.14% YoY, despite a slight dip of 0.19% QoQ in 4Q21.
“Following the liberalisation of movement controls and economic activity in 4Q21, we saw an uptick in the overall property market activity in Malaysia.
“We believe that the market will remain cautiously optimistic about continued improvements in the general market environment as the year progresses, on the back of better economic conditions and higher vaccination rates,” he said.
According to Shylendra, the Sale Supply Index, which provides a view of supply trends through the volume of newly launched and resale property listings on propertyguru.com.my, reflects some of this confidence.
He said in 4Q21, supply moved up by 13.54% QoQ, following negative growth in the previous quarter, while supply grew by 22% YoY, compared to 5.3% YoY growth in 3Q21.
Commenting on the outlook, Shylendra said the recovery of the property market will continue to be closely linked with the overall health of the national economy, and it will also face new complexities in terms of consumer confidence with the altered social and commercial landscape driven by Covid-19.
He noted that among the challenges faced by the property market is the lack of incentives for buyers since the government-initiated Home Ownership Campaign (HOC) ended on Dec 31, 2021.
“With little direct incentives for the property market in Budget 2022 and the expiry of the HOC just as the market begins to find its footing, there is no doubt that buyer’s confidence may be impacted, and further pressure will be placed on financial indicators in the near term.
“As such, expectations of a quick property market rebound this year have now been moderated. Instead, we can expect improvements to occur at a gradual, steady and measured pace.
“In the meantime, the rental market will grow as demand increases among those who opt to put off purchasing plans during this period of economic uncertainty,” he added.
He said those who have the financial means, especially, should take advantage of this period of low-interest rates and suppressed pricing opportunities to benefit from capital appreciation for their investment in the future.