The residential property market remains undersupply amid discrepancy between buyersâ€™ income and property prices, said consulting firm CBRE-WTW.
MD Foo Gee Jen said the market is not facing a severe oversupply situation, in fact, the market generally remains undersupply.
â€œBut of course what we are experiencing is a situation of undersupply with glaring mismatch in price and location,â€ he said at the Real Estate and Housing Developersâ€™ Association Malaysia Instituteâ€™s Malaysia Property Outlook, Trends and Property Transaction forum in Kuala Lumpur yesterday.
â€œFurthermore, the income growth has not been able to catch up with the increase in property prices over the last five years,â€ he said.
Foo explained that from 2010 to 2015, the growth of property prices appreciated between 15% and 20% year-on-year (YoY), whereas the growth in terms of income is only increased from 5% to 5.5%.
The wide disparity between property appreciation and income level, he said, has created a big gap where income valuers are unable to match with house prices.
â€œThe dislocation, in terms of product and location, is also apparent, whereby most of the products specifications do not meet the marketâ€™s current demand, coupled with a lack of infrastructure surrounding the development areas,â€ he added.
Thus, Foo urged all relevant stakeholders to assess the marketâ€™s current demand to cater to the undersupply segment.
â€œI think it is a very obvious case, everybody is looking at affordable housing. However, there is always danger because overbuilding of affordable housing will contribute to a situation of mismatch in location, again,â€ he warned.
Foo also suggested property developers to consider utilising their unsold stocks for the rental market as affordability continues to be the main concern among buyers.
â€œPerhaps, within a vibrant movement, coupled with millennials who are a lot more mobile compared to baby boomers, this could be the right ingredient for us to look into the option of renting.
â€œAlso, the current soft market sentiment is making rental yields a good option to look at,â€ he said.
Foo also said industry players need to emulate the built to- rent concept from the more developed countries such as the UK, which have proven to be successful since the introduction in 1950s.
â€œThe built-to-rent concept is not something new, even in the UK. They have started this concept decades ago, coupled with their governmentsâ€™ support to encourage a lot of cooperative trust funds to build developments for rental purposes.
â€œOn the developersâ€™ side, with this concept, it can actually woo a lot more institutional investors such as Lembaga Tabung Haji, Employees Provident Fund and the Retirement Fund Inc to buy your project,â€ he added.