Speedhome predicts that the residential rental market will face increasing pressure to reduce rental price as the loan moratorium is coming to an end, and the pressure on homeowners to repay loans and the income of tenants is decreasing.
Speedhome Chief Executive Officer, Wong Whei Meng stated that according to the company’s transaction data, after the movement control order ended, the rental expectation gap between homeowners and tenants has been significantly reduced.
The pressure for rent reduction does however still exist. This is primarily due to two factors, the decrease in tenant income and the increase in housing supply.
“After the movement control order(MCO), more homeowners choose to rent their houses through online platforms. Young tenants have become prone to shop around on different rental platforms. This makes the housing market more transparent and encourages tenants to choose to relocate because of the slight difference in rent.”
According to the analysis by the Bureau of Statistics, Malaysia’s unemployment rate this year is estimated to rise to 5.5 percent at the end of the year. Even if tenants are lucky enough to keep their jobs, they will face pressure to reduce their wages.
In the past few months, Speedhome’s residential housing supply has grown steadily, with a monthly growth of about 10 percent. This shows that more and more owners are willing to try to rent out their house through an online platform, and many older homeowners call or personally come to the company and ask how to use the company’s mobile app to find tenants.
At the same time, the government may consider levying a housing vacancy tax, which may also speed up the willingness of homeowners to find tenants for their houses, but Speedhome believes that housing vacancy tax is not a good idea.
Wong Whei Meng pointed out that the housing vacancy tax is not a good policy because the housing market in Malaysia has fallen into a cold winter. The tax will be the last straw to crush the real estate market.
“In the past few years, the housing market’s interest in buying has cooled down significantly. The government does not need to further sell houses. Instead, it should think about how to more efficiently balance market supply and demand, and avoid developers from building high-priced houses in the wrong location that are decoupled from the needs of local residents.”
Fortunately, many developers have delayed or suspended their new property projects. This is a good thing for the residential rental market. The market supply will not continue to increase, which provides a certain buffer for the decline in residential rents.
Speedhome expects that the number of people who choose to rent will continue to increase, but the homeowner must find ways to provide more added value to the tenants.
Whei Meng says Speedhome’s policy of replacing the deposit with insurance is a weapon for renting; there are also homeowners who targeted the student tenant market, by providing public space cleaning services and the internet as an added bonus.
In addition, many homeowners are not tech savy and they post their rental ads on different platforms, both for short-term and long-term rentals, to increase the exposure of the house which is considered to be a wise approach.
Speedhome also believes in the next 6 months to 1 year, the low- and medium-priced residential rental market in Malaysia will still favor tenants.
“It is recommended that homeowners make good use of digital technology and publish their own rental information on different platforms. Traditional advertising such as hanging banners and posting advertisements for rent on the street are no longer appropriate. Renting a house is not so-called passive income, and the homeowner must be more active,” Whei Meng says.