What is the future of the rental market in Malaysia?

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After nearly two years of the global pandemic disrupting economic and social activities, 2023 is expected to be a year of economic recovery, although with some challenges. As international borders reopen and the job market improves, along with increased local demand, economic growth is expected to be positive. 

There are many reasons why people are opting to rent in the current situation:

1. Increased Demand for Affordability

Rising property prices in many urban areas are leading to increased demand for more affordable homes in the secondary market. According to the Edge Market, Selangor's average house price increased from RM204,105 in 2000 to RM 534,846 in 1Q2021, with an average annual change of 4.8%. Double-digit growth was seen in 2010-2013. The highest annual change of 23.11% was in 2015, while 2020 saw only a 3.63% increase.  

2. Growth of the Rental Market

More people are opting for rental properties instead of buying, leading to the growth of the rental market in Malaysia. Siva from The Edge Market mentions that the majority of the population cannot afford houses, so they end up renting. And some become renters for life, which means they were not able to save enough to buy a single property,

3. Rise of Online Real Estate Platforms

The use of online real estate platforms such Propertyguru, iProperty, Edgeprop are increasing with additional features like virtual tour, zero deposit solutions making it easier for landlords and tenants to connect and transact in the secondary market.

4. Emergence of Proptech

Proptech companies in Malaysia, such as iProperty and Propertyguru, which employ technology to improve the real estate experience by linking owners and landlords with buyers and tenants, are expanding. It can provide the much-needed speed and precision for developers, banking institutions, and property investors when valuing their precious assets.

5. The Impact of the Sharing Economy

The sharing economy is expected to continue growing, leading to the development of new models for shared ownership of properties which leads to the rise of co-living or subletting. According to a Malaysia Digital economist, The global impact of the sharing economy will be in the range of USD3.1 trillion with a potential growth rate of 31% according to the study where Malaysia has the potential to see a contribution of up to USD 14 billion to its GDP by 2025. 

It is anticipated that the rental market will continue to be a significant aspect of the real estate industry, providing opportunities for both buyers and sellers to connect and engage in transactions. However, ongoing factors such as rising inflation, an increase in the Overnight Policy Rate (OPR), and affordability issues are expected to weigh on market conditions. As a result, it may take some time before consumers become confident in making large property decisions. 



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