An economist has suggested that developers turn landlords and rent out their unsold units amid the current property overhang.

Carmelo Ferlito, from the Institute for Democracy and Economic Affairs (IDEAS), said developers have no choice but to bite the bullet as many properties remain outside the affordability of Malaysians.

Recently, Bank Negara Malaysia said the prices of homes are “seriously unaffordable” by international standards, where a house is deemed affordable if it is priced not more than three times the annual household income.

The central bank’s financial surveillance department director, Qaiser Iskandar Anwarudin, said the average price of a newly launched home is RM417,262 while the maximum affordable house price nationwide is at RM282,000.

Ferlito said although the glut of homes is not necessarily a result of greed but rather poor decision-making, developers need to rethink their strategies.

He said he did not agree with calls for lending rules to be relaxed as this could affect the banking sector and household debt.

“We want to avoid a subprime-style crisis,” he said, referring to the US subprime crisis in 2008 triggered by a spike in foreclosures as borrowers defaulted on loans they could not afford.

Ferlito said developers could hold on to their unsold properties and wait for the market to pick up again by offering rent-to-own schemes although prices are unlikely to drop to the point they fell into the so-called affordable category of RM300,000.

“For the unsold stock, probably one solution is for the developers to become landlords, to start renting out the unsold units and at least get some cash flow in.”

Meanwhile, National House Buyers’ Association (HBA) secretary-general Chang Kim Loong said people should not be against the idea of renting if they could not afford a home.

“There is no shame in renting, and aspiring house buyers should continue renting until they are financially ready to buy their dream home,” he said.

He said that as the economy is still considered to be slow, it is a tenant’s market and prospective homeowners should find the best rental deals while saving up to buy a property later.