PETALING JAYA: Despite the recent interest rate hike, real estate agents are looking forward to promising growth in the housing sector this year in view of last year’s record number of transactions.
Malaysian Institute of Estate Agents president Chan Ai Cheng said the country’s total property transaction value hit RM179.07bil in 2022, the highest-ever value recorded by the National Property Information Centre since 2001.
She said while everyone had been predicting a year of recession, inflation as well as the pressure from the high costs of living in 2022, property transactions saw a double-digit growth, increasing by 29.5% year on year to 389,000 transactions from 300,497 transactions in 2021.
She added that this gave housing agents a positive outlook, with most of them expecting this year to exceed the real estate transactions in 2022.
Home buyers, according to Chan, preferred properties priced between RM500,000 and RM800,000.
“Affordable prices, convenient locations and access to public transportation are important factors for buyers.
“Not only buying, but also renting, has received a good response in terms of enquiries, and rental market prices are more stable than before the (Covid-19) pandemic,” she said.
Asked if the interest rate hike had affected home sales and rentals, she said the 0.25% increase, which equates to an additional RM60 to RM70 per month for a RM500,000 home loan, was thought to be acceptable to home buyers.
An internal poll among housing agents conducted in March also revealed an increase in housing and rental enquiries for this year.
“Homebuyers with a stable income will consider buying a home or preparing to invest in a second home,” she added.
Early this month, Bank Negara Malaysia announced a raise in the overnight policy rate by 25 basis points to 3%, the first increase since November last year.
Real Estate and Housing Developers’ Association (Rehda) president Datuk NK Tong said according to its Property Industry Survey 2H 2022, home sales were expected to improve further in the second half of this year.
“All categories of home sales continue to perform well, particularly those in the more affordable categories of below RM300,000 and below RM500,000, which will continue to attract first-time home buyers.
“We see a global trend of prospective homeowners willing to go further from city centres for more affordable landed homes, given the opportunity and flexibility of work-from-home and hybrid work schedules,” he said.
However, Tong said compliance costs, including levies and contributions to authorities as well as the construction of utility infrastructure within the project, continued to rise in some states, suffocating the smooth operation of the housing delivery system and increasing the number of sick and abandoned projects, a trend that had worsened over the last 50 years.
“Due to the pandemic, the industry has also anticipated an increase in sick, late, and abandoned projects,” he added.
Tong said as state authorities were in charge of matters relating to land, the Federal Government only had a limited amount of control or jurisdiction.
“To have a truly transparent and well-functioning housing delivery system, the federal or state government must fully fund the provision of affordable housing for the B40 rakyat so that developers can deliver more affordable-priced homes in the open market for the M40.
“Currently, M40 homeowners are burdened with paying more for their homes due to cross-subsidies paid by them for regularly-priced homes to subsidise affordable housing for the B40.
“This creates distortions in house prices and can lead to sick or abandoned housing if the M40 have to pay for homes beyond their ability, leading to projects with more unsold units,” he said.
He also warned that there was a risk the Malaysian housing market would be affected if there is a global slowdown.
Another unintended consequence would be the reduced production of much-needed affordable housing for the B40 as cross-subsidies would not be available should there be a slowdown in housing sales, he added.
Universiti Tunku Abdul Rahman Professor of Economics Wong Chin Yoong said the increase in interest rates would affect the cost of loans for home buyers.
He said the increase would affect the price of houses priced by developers as well as home loans for first-time buyers.
“It’s not just loan borrowers who can’t afford to pay the interest. Now, employees’ wages cannot keep up with rising house prices.
“While an increase in interest rates will directly affect housing costs, it is not the cause of stagnation in housing sales, and the government should look into this issue,” he said.
