THE housing market in Malaysia is a key sector of the economy, contributing to growth and providing housing for millions of people.
According to the National Property Information Centre (Napic), the total value of residential property transactions in Malaysia was RM141.98 billion in 2019, up from RM133.27 billion in 2018.
However, the impact of the Covid-19 pandemic on the housing market in 2020 and beyond remains to be seen.
Economic conditions are a major factor influencing Malaysia’s housing market. The Malaysian economy has been relatively strong in recent years, with gross domestic product growth of 4.3% in 2019.
However, the Covid-19 pandemic has caused significant disruptions and uncertainty. The economy may continue to recover but there may be lingering effects of the pandemic, such as high unemployment rates and reduced consumer confidence. These factors can impact the demand for housing as people may be hesitant to purchase homes or take on a mortgage debt in uncertain economic times.
Government policies are also important in shaping the housing market in Malaysia. The government has implemented various policies in recent years to support the housing market, including providing affordable housing and incentives for home buyers.
The government should continue to implement policies that can help lift the housing market, such as adjusting interest rates, mortgage policies and providing tax incentives. These policies can help increase the demand for housing and also make homes more affordable.
Another significant factor that can influence the housing market is demographic trends. With the country’s population projected to grow, there may be an increase in demand for housing, particularly from the younger generation as they enter the workforce and establish their own households.
At the same time, Malaysia’s ageing population may lead to increased demand for retirement homes and assisted living facilities. These demographic trends can influence the type of homes that are sought after and the prices of properties.
Supply and demand are also crucial factors in the housing market. Recently, there has been a shortage of affordable housing, especially in urban areas. This has led to elevated housing prices and increased demand for rental properties.
According to Napic, the number of unsold residential properties in Malaysia increased from 30,115 units in the fourth quarter of 2019 to 31,661 units in the first quarter of 2020. This indicates a potential oversupply in the market.
The demand for housing is likely to remain strong this year while the supply of affordable housing may struggle to keep pace, potentially leading to further increases in prices.
While the future of the housing market is uncertain, it is clear that economic conditions, government policies, demographic trends and supply and demand factors will continue to shape the market for now.
The government recognises the need to increase the supply of affordable housing to meet the growing demand of the younger generation.
To address the shortage of affordable housing, the government has implemented several policies and initiatives. One notable initiative is the 1Malaysia People’s Housing Programme (PR1MA), which targetted to build 500,000 affordable homes.
However, more needs to be done to ensure that affordable housing is accessible to all.
One issue is the location of affordable housing. In many cases, affordable housing is located in areas distant from urban centres, lacking fundamental infrastructure, such as public transport, schools and hospitals. Consequently, residents face challenges in accessing essential services and employment opportunities.
The government may need to consider developing affordable housing in more central locations that are well-connected to urban areas.
Another issue is the financing of affordable housing. Many Malaysians find it difficult to obtain financing to purchase a home, especially given the prevailing economic climate.
The government may need to consider policies that provide better access to financing for low-income households, such as subsidies, grants or low-interest loans.
The government can also encourage developers to offer financing packages that are tailored to the needs of low-income households.
Finally, the government needs to encourage the development of innovative housing solutions, such as micro-apartments, co-living spaces and shared housing arrangements. These solutions can help to increase the supply of affordable housing and provide more flexible and affordable living options for the younger generation.
In conclusion, increasing the supply of affordable housing is a complex challenge that requires a multifaceted approach.
The government needs to work closely with developers, financial institutions and local communities to ensure that affordable housing is accessible and sustainable.
By implementing policies that address the various challenges facing the housing market, the government can help to ensure that all Malaysians have access to safe, affordable and sustainable housing.
Dr Paul Anthony Mariadas and Dr Uma Murthy are Lecturers for the School of Accounting and Finance at Taylor’s Business School, Faculty of Business and Law, Taylor’s University. Comments: letters@thesundaily.com
