Loan moratorium is coming to an end in September and there will be pressure on homeowners to repay loans after enjoying six months of reprieve. Speedhome, a platform connecting landlords directly to tenants, predicts that the residential rental market will face increasing pressure to reduce rental price as income of tenants may be affected.
Its CEO Wong Whei Meng stated that according to the company’s transaction data, after the movement control order (MCO) 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 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,” he pointed out.
According to the Bureau of Statistics, Malaysia’s unemployment rate this year is estimated to rise to 5.5% at the end of the year. Even if tenants are lucky enough to keep their jobs, they will face pressure of reduced wages.
In the past few months, Speedhome’s residential housing supply has grown steadily, about 10% monthly. This showed that more and more owners are willing to try to rent out their house through an online platform, while many older homeowners call or personally come to the company and ask how to use the company’s mobile app to find tenants.
Housing vacancy tax
At the same time, the government may be considering levying a housing vacancy tax, which may also speed up the willingness of homeowners to find tenants for their houses, but Speedhome believed that housing vacancy tax is not a good idea because the housing market in Malaysia has fallen into a ‘cold winter’ state.
“The housing vacancy tax will be the last straw to crush the real estate market. This economic slowdown is not a good thing for Malaysia.
“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,” Wong said.
Fortunately, many developers have delayed or suspended their new property projects. This is a good thing as the market supply will not continue to increase, which provides a certain buffer to arrest the decline in residential rents.
Speedhome expected 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.
In the next six months to a 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 proactive to secure good rental.