The lack of affordable housing in the market has mostly affected the mid-income mass market segment or those in Generation Y, said Sheldon Fernandez, country manager at PropertyGuru Malaysia.
Accounting for 38 percent of the population, those in Generation Y are the ones likely to find their dreams of owning a house dashed.
Nonetheless, the market still has its bright spots with the rental market expected to remain robust driven by the increasing pool of aspiring first-time homeowners who in deferring their home-buying decision, will turn to the rental market “to provide a roof over their heads while continuing to save for their future home,” said Fernandez.
“It is likely that rentals may increase or remain stable but this will depend on the location of the property per se,” he added.
Higher-end rental properties may see lower rents due to external factors like the slump in the oil and gas industry, which resulted to expats leaving many vacant units within the city centre.
To keep prices low and within the reach of Generation Y and first-time homebuyers, property developers build smaller units within the city centre and other urban centres that are priced from RM300,000 to RM500,000. Unit sizes range between 450 sq ft and 850 sq ft, said Fernandez.
The Selangor Housing and Property Board (LPHS) has capped the price for affordable small office versatile offices (SOVOs), small office flexi offices (SOFOs) and small office home offices (SOHOs) at RM230,000, while that of serviced apartments at RM270,000.
“The sizes of these units range from 450 sq ft to 550 sq ft,” he said.
He expects homes in good locations – particularly those in transit-oriented development, or those slightly away from the city, which meet the growing demand among upgraders for suburban living – to continue to be snapped up.
“Consistent with this trend, locations in the outskirts of Selangor i.e. Rawang, Semenyih, Batu Arang, Kota Kemuning, etc. are beginning to emerge as the new growth spots for property still within relatively close proximity to the Klang Valley.”
As buyers look to finance their acquisitions, Fernandez expects to see withdrawals from the Employee Provident Fund (EPF) to increase, both in value and number, next year.
In fact, he expects the property market to remain sluggish in 2017, on the back of the unresolved issues of unaffordability, high loan rejections and other macro-economic issues.
“Homes priced between the RM500,001 to RM700,000 range are likely to see most number of loan rejections and thence slower sales,” added Fernandez.
Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email firstname.lastname@example.org