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The Malaysian housing market value is grappling with many formidable challenges in 2023.
These challenges are multifaceted and have the potential to significantly impact the dynamics of the real estate sector in the country.
What are these challenges?
| Malaysian housing market 2023 |
Challenges faced in Malaysia’s property valuation
1. Economic Uncertainty
The global economic landscape is currently uncertain, and Malaysia is no exception.
This pervasive uncertainty cascades the nation’s market value, making prospective homebuyers more cautious about committing to substantial financial investments like purchasing a property and the property valuation process.
2. Rising Interest Rates
The Bank Negara Malaysia has embarked on a trajectory of increasing interest rates in recent months – the gross development value of a property.
This monetary policy shift is primarily aimed at curbing inflation. However, the consequence is an increase in the cost of borrowing for individuals aspiring to buy homes, thereby dampening the final capital value.
3. Shortage of Affordable Housing
A significant challenge confronting Malaysia’s housing market is the glaring shortage of affordable housing units, particularly in urban areas.
This absence of affordable options makes it exceedingly challenging for many Malaysians to climb the property ladder.
4. High Property Prices
Over the past few years, Malaysia has witnessed a steady uptick in the gross development value of Malaysian residential properties.
This upward trajectory in real estate costs is exacerbating the difficulties faced by potential homebuyers, particularly first-time buyers.
Concerns surrounding challenges on Malaysia’s market value?
Here are some specific instances that underscore the challenges faced by the Malaysian housing market in 2023:
1. Affordability Concerns
According to a recent market data approach by PropertyGuru Malaysia, 60% of respondents identified affordability as the most significant challenge afflicting the housing market and property details.
2. Supply-Demand Imbalance
The supply of affordable housing units fails to keep pace with burgeoning demand per the recent valuation report by the Malaysian government.
In 2022, the government’s construction of only 150,000 affordable homes fell drastically short of the targeted 500,000 units through property developers.
3. Rising Cost of Living
Escalating living expenses, including food, transportation, and other essential commodities, exert immense pressure on Malaysians.
This economic strain makes it arduous for individuals to accumulate sufficient savings for a down payment on a property’s market value.
4. Government Policies
Specific government policies inadvertently impede efforts to enhance housing affordability in the current market.
For instance, the decision to elevate stamp duty and perform a valuation report on property transactions has increased the overall property acquisition cost.
The Malaysian government has initiated measures to tackle these housing market challenges, such as the MyDeposit scheme to assist first-time homebuyers on a particular property.
What are the possible solutions to these challenges on property value?
1. Providing affordable housing (Residensi Wilayah [RUMAWIP])
In addition to the MyDeposit scheme, the Malaysian government has introduced state-owned affordable housing initiatives in various regions.
One notable program is the Regional Housing Plan, Residensi Wilayah (RUMAWIP), which has gained popularity among first-time homebuyers – tailored explicitly as an affordable housing program to assist first-time homebuyers in Kuala Lumpur, Putrajaya, and Labuan.
Per the official RUMAWIP website, the program currently offers property details with prices ranging from RM198,000 to RM300,000.
This presents an attractive opportunity for first-time homebuyers employed within the federal territories.
Eligibility criteria for applicants include:
- Malaysian citizenship, with an age of 21 and above.
- Residency within Malaysia, specifically born, employed, and residing in the Federal Territories (wilayah).
- Status as a first-time homebuyer.
- A minimum monthly income falls between RM2,800 and RM10,000 (individual) or RM15,000 (married). Priority is accorded to applicants with an Employees’ Provident Fund (EPF) account.
These conditions provide a clear pathway for aspiring homeowners to participate in the RUMAWIP program and secure their first property more affordably.
2. Encouraging early childhood education and creating quality jobs
Quality jobs and early childhood education can have a positive impact on the housing market in Malaysia.
Investing in quality early childhood education (ECE) can help promote life-long learning and upskilling.
This can lead to a more skilled workforce, attracting high-quality jobs to the country’s current market.
High-quality jobs can help improve economic conditions, which could lead to increased demand for housing.
In addition, quality ECE can also help promote child development and well-being, leading to better educational outcomes and higher earning potential.
This could help increase the affordability of homes for any property buyer.
What can you do as home buyers, investors or property managers?
Individuals aiming to buy a home or invest have a promising opportunity in the rental property market, poised for growth amidst inflation, rising material costs, increasing interest rates and estimated market value.
Additionally, the government offers a variety of affordable housing options under numerous initiatives, presenting another attractive avenue for potential homebuyers and investors.
Is the current property valuation in Malaysia worth the homeownership?
It’s worth noting that these strategies offer. Reading your intake in the property valuation report is a great starting point. It opens doors to numerous possibilities in addressing the current challenges in the property value of owning a home.
Despite these challenges, the real estate industry promises great returns and remains an excellent choice for investment. Get in touch with our professionals today to start your investment journey!