The residential property market remains undersupply amid discrepancy between buyers’ 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.
“But of course what we are experiencing is a situation of undersupply with glaring mismatch in price and location,” he said at the Real Estate and Housing Developers’ Association Malaysia Institute’s Malaysia Property Outlook, Trends and Property Transaction forum in Kuala Lumpur yesterday.
“Furthermore, the income growth has not been able to catch up with the increase in property prices over the last five years,” 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.
“The dislocation, in terms of product and location, is also apparent, whereby most of the products specifications do not meet the market’s current demand, coupled with a lack of infrastructure surrounding the development areas,” he added.
Thus, Foo urged all relevant stakeholders to assess the market’s current demand to cater to the undersupply segment.
“I 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,” 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.
“Perhaps, 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.
“Also, the current soft market sentiment is making rental yields a good option to look at,” 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.
“The built-to-rent concept is not something new, even in the UK. They have started this concept decades ago, coupled with their governments’ support to encourage a lot of cooperative trust funds to build developments for rental purposes.
“On the developers’ 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,” he added.