Malaysians Concerned Over Housing

Gordana Davila

February 9, 2013

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Survey findings by the iProperty Group have revealed that affordability and rising house prices continue to be a major concern among Malaysians.

The iProperty.com Asia Property Market Sentiment Survey (H1) 2013, conducted on the iProperty Group’s leading websites in Malaysia (iproperty.com.my), Indonesia (Rumah123.com and rumahdanproperti.com), Hong Kong (GoHome.com.hk) and Singapore (iproperty.com.sg), is the first cross-market online property survey of its kind.

Key Findings in Malaysia: 

  • Malaysians reported the highest annual household income compared to respondents in Indonesia, Hong Kong and Singapore

  • Malaysians continue to own significantly more than one property (41%) compared to respondents in Indonesia (16%), Hong Kong (18%) and Singapore (22%)

  • Location and Price remains the two most important factors of consideration in determining the purchase of property

  • Similar to previous survey findings, affordability and rising house prices continue to remain the biggest concern among respondents (70%). Respondents think that property prices will increase across all dwelling types with landed property becoming less affordable in the first half of 2013

  • 65% are not convinced that 30 abandoned housing projects in Malaysia will be revived, despite reports that the Housing and Local Government Ministry succeeded in reaching its Key Performance Indicator by reviving 32 abandoned housing projects in 2012

  • 47% feel that more should be done to protect property buyers in the country

  • 65% do not think that the allocation of MYR1.9 million to build 123,000 affordable housing units in strategic locations in 2013 will be effective in meeting the rising housing demand for low-to middle-income earners

  • Respondents were largely split between wanting the government to do more (32%) and believing that the recent increase in income limit for My First Home Scheme will do enough to assist more people in their homeownership journey (32%)

  • 45% do not think that that the increase in the Real Property Gains Tax from 10% to 15% for properties sold within the first 2 years, while properties sold from the third to fifth year will be increased from 5% to 10%, will curb speculation

  • Only 19% of respondents want to invest in property overseas with the top three destinations being Australia, Singapore and the United Kingdom

Shedding further light on the iProperty.com Asia Property Market Sentiment (H1) 2013 survey findings, iProperty Group’s Chief Executive Officer, Shaun Di Gregorio, said that despite the residential property market in Malaysia being buoyant in the past two years, in 2013, property buyers are treading carefully while adopting a wait-and-observe stance.

“Malaysia’s economy is projected to grow at a healthy pace of between 4.5% and 5% in 2012 and at the same time, a number of key infrastructure projects are being implemented under the Economic Transformation Programme. However, with the prolonged global economic uncertainties, more stringent vetting process adopted by banks and the implementation of the various measures by the government to avoid an asset bubble, local and foreign investors are being cautious in their approach to purchase and invest in property,” said Di Gregorio.

The Findings 

The survey polled over 8,000 respondents from Malaysia and the majority of respondents were aged between 26 to 35 years old and 57% had an annual household income between MYR 30,001 – MYR 80,000.

When it came to purchasing property, 79% indicated that they wanted to purchase property within 6 months to 2 years. 34% indicated that their budget is MYR350,001 to MYR500,000 followed by 32% who would spend up to MYR350,000 for a property. Purchasing a home of more than MYR400,000, based on a 30-year repayment period, in a matured or burgeoning areas may not be a viable option for respondents with an annual household income of less than MYR60,000.

The findings have revealed that landed property continues to be the most popular choice among respondents. High-rise living is also gaining fast popularity possibly due to a greater appreciation for condo facilities and security features. With the stock market being too volatile, unit trusts returns are low and bond investments being too complicated, it was not surprising to see that 33% of respondents viewing property as a long term investment while 28% wants to purchase property to provide a better environment for their family.

Half of Malaysian’s surveyed answered that property prices are too highly priced, while 16% answered that they cannot find a suitable property.

“This could be because of the budget that these respondents have, finding a home in a location that they desire is not feasible as properties in a good location are beyond the loan repayment capabilities of the country’s young population. Malaysia’s property prices are certainly lower compared to our neighbouring countries, especially Singapore and Hong Kong,” said Di Gregorio.

On the interest of investing in property overseas, 36% of Singaporean respondents showed a higher interest compared to respondents from Malaysia (19%), Indonesia (17%) and Hong Kong (11%).

“Singaporeans are cashing in on a market where they will be able to get more value for their investment. According to Bloomberg, the Singapore dollar has risen more than 5.5% in the past 12 months and is the second-best performer among the 11 Asian currencies. Hence it was not surprising that Singaporeans would pick Malaysia (42%) over Australia (14%) and the United Kingdom (8%) as their top three destination of choice,” elaborated Di Gregorio.

Malaysian Property Market Sentiment – Affordability gets Top of Mind Concern

A majority of respondents are calling for more affordable housings (69%), as it is likely that many families are starting to feel the weight of soaring property prices as opposed to wages, which continue to grow at a slower rate.

According to Di Gregorio, high property prices translate into higher rentals, which mean that urban dwellers who cannot afford to buy houses have to spend a fair bit on rent. This is in addition to the current cost of living such as car ownership as well as rising prices of food, products and services.

While Budget 2013 promised a MYR1.9 billion allocation to build 123,000 affordable housing units in strategic locations, Kuala Lumpur, Shah Alam, Johor Bahru, Seremban and Kuantan, 65% of respondents did not think the move will be effective in meeting the rising housing demand for low-to middle-income earners.

In addition to that, with the raise from MYR3,000 to MYR5,000 in the income limit for individual loans and a combined household income of MYR10,000 between husband and wife under the My First Home Scheme, 32% believed that the move will assist more people in their homeownership journey, while 28% did not think it will.

Outlook for H1 2013

The residential property market during the first quarter of 2013 is expected to be soft as investors stay on the sidelines. Sales of landed and strata homes are expected to slow down while prices generally remain stable. Price correction may also take place involving landed and strata homes in secondary locations.

The outlook for property investors in 2013 is still positive especially with selected locations poised to experience rapid growth.

The full survey findings can be downloaded directly from www.iproperty.com.my

 

 

 

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Simon Baker is the Founder and Executive Chairman of Online Marketplaces and Property Portal Watch. Involved with property portals for 15 years, he’s a well-recognized expert and industry consultant.
As former CEO/MD of the REA Group for 8 years, Simon led the group to its current market-leading position. When he joined REA Group in 2001, it had $4m in revenues, $6m in losses and an $8m market cap.
By 2008, the company presided over $155m in revenues, $35m in EBITDA and enjoyed a peak market cap of $1b. Simon is currently Chairman of the Mitula Group and Real Estate Investar and a serial portal founder and, investor.