Some 92% of Malaysians have expressed their desire to buy a home rather than rent, with 53% wishing to buy a property by end 2018.
Asking prices of properties (from both property developers and individual homeowners) also continues to dip with a 2.5% decline seen up to Q3 2018 (year-on-year comparison). Since Q1 2015, prices have dipped 11.81% amidst a property overhang / glut situation for certain property segments in certain locations.
Despite what appears to be a buyer’s market and improving consumer sentiment and stronger desire to buy, homes largely remain unaffordable to most Malaysians.
In tandem with the spirit of fresh possibilities and optimism in a New Malaysia, PropertyGuru Malaysia, the country’s leading online property portal proposes the following for inclusion in Budget 2019:
1. Providing Malaysians with Greater Access to Financial Information
While loan approvals have improved, credit visibility remains a problem for most Malaysians. PropertyGuru proposes that more organisations step up to empower Malaysians with quicker and more convenient credit checking facilities to accurately assess their Debt Service Ratio (DSR) and Eligible Mortgage Amount (maximum loan eligibility). Such checks should be made available for free to all Malaysians.
2. Opening More Land for Development
Given that land scarcity has become a key contributory factor to rising home prices, especially in urban areas, PropertyGuru recommends the following:
- Opening up more government reserve land for development with all land sales to be conducted via open tender. At present, only a fraction of affordable home projects are built on government or state-owned land.
- Emulating the best practices of other countries by having a lower threshold for enbloc sales and encouraging redevelopment of old buildings and other government assets for affordable housing. Lower enbloc sale threshold can also be considered to facilitate development of older condominiums with lower density ratios thereby reducing price pressure on new land.
3. Revising Interest Rates for Home Loans
PropertyGuru recommends a reduction of 0.5-1.0% off interest rates for first-time homeowners buying affordable properties within a specific price range. This could be homes under public sector affordable home schemes such as Rumah Selangorku, PPAM or PR1MA or even opened to affordable homes built by private developers.
4. Reducing Upfront Costs for Home Purchase
In addition to end-financing, PropertyGuru recommends reducing the upfront costs associated with a home purchase — which include legal fees and stamp duties for the purchase of affordable homes.
5. Government Linked and Public Listed Companies to Practice Increased Profit Sharing to Boost Employee Income
Malaysia continues to face a large disparity in median incomes between C-Level / Senior Management and employees. Public organisations and public listed companies should lead in providing greater wage equitability by introducing more performance linked bonuses such as year-end bonuses, profit sharing schemes and so on.
6. Providing Semi-Built Homes
Given that a large number of Malaysians when buying a new home undertake extensive renovation works, PropertyGuru recommends construction of semi-built homes that allow homeowners greater flexibility in customising spatial usage and layout as well as fixtures and furnishings. This may contribute to lower construction costs and the savings reflected in the price of homes.