KUALA LUMPUR: The challenging property outlook this year will spur demand for more affordable homes.
Association of valuers, property managers, estate agents and property consultants in the private sector, Malaysia (PEPS) president Datuk Siders Sittampalam said the demand for affordable housing has increased over the years.
“The volume of property launches have reduced dramatically over the last few months. As such, there has been a mismatch of demand and supply.
“Given the challenging market scenario, it will be geared towards medium-level homes rather than high end,” he said at a press conference during the 9th Malaysian Property Summit yesterday.
Siders said there would be an increase in demand for affordable housing, adding however that the development of such homes should not just be borne by developers.
“Developers are more commercially driven and it is not economical for them to set up affordable houses in major cities, and as much as Pr1ma is doing, they are still not achieving their targets. There should be more commitment from the Government.
“The affordable housing scheme in Malaysia needs to be revamped and there should be more commitment by the Government.”
PEPS organising chairman James Wong said the affordable housing sub sector had been a “neglected area” for many years.
“It is a sub sector that has been neglected by the Government and developers for many years. So there’s a huge gap in terms of supply and demand,”
He explained that it was not conducive for developers to purchase tracts of land at high prices specifically for affordable housing schemes.
“What the Government or quasi government should do is release surplus lands and engage in a joint ventures with developers to develop affordable houses.”
Given the challenging market scenario, there have been suggestions that developers should develop to rent, rather than sell. This, however, is a concept that is unlikely to work, according to Wong.
“Developers need quick cashflow, and if you build to rent, the returns will be low, so it won’t work,” he said.
Wong said he expected rental yields this year to either remain flat or be even lower than 2015.
“This is because of the oversupply situation in the market currently, especially within the office sub sector.”
He said this was especially for the oil and gas sector, where employment rates had been affected due to plunging oil prices.
Despite the challenging property outlook, he doesn’t not expect the market to slip into a recession this year.
“There will be fewer launches within the primary market and lower take up rates. We also expect more auctions and foreclosures by banks.”
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