Should millennials buy or rent their first house?

 By Sharen Kaur - Published by NST Property, July 19, 2022 

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sharen@nst.com.my

Should millennials buy or rent their first house in Malaysia?

Whether to buy or rent is a personal decision based on your circumstances and preferences. You should consider your current financial situation, your needs and preferences, the price-to-rent ratio, and the length of your stay.

When houses are too expensive for the average person to buy, renting is a good option.

According to the recently released Juwai IQI Malaysia Property Survey and Index Q3 2022, property prices and rents are expected to rise significantly over the next 12 months.

Kashif Ansari, co-founder and group chief executive officer of Juwai IQI, said that the data was gathered from a recently completed survey of Malaysian real estate agents.

"They predict that prices and rents will rise significantly over the next year. If they are correct, we can anticipate a significant increase in activity. People who own their own homes will benefit from rising property values, while those who rent or are looking to buy will have to continue to increase their budgets," he said.

According to the survey, the real estate industry anticipates significant residential price growth over the next 24 months.

Residential prices are expected to rise by 11.8 percent nationally over the next year, according to real estate agents. The upward trend will continue the following year, with prices rising 16.5 per cent over the next 24 months.

Nearly nine out of ten Malaysian real estate agents polled said they would advise a friend to buy now than rent.

In comparison, only 11 per cent said they would recommend to a friend that it is better to rent today than to buy.

"Whether agents advise you to buy or rent is a strong indicator of their outlook for the market. This data suggests to me that agents expect renters to face rate increases over the next 12 months and for home prices to correspondingly rise. Those who buy now would be spared from these pressures.

"When you look at who has the biggest opportunity here, you see that slightly more than one-third of Malaysians aged 20 to 39 are renters. That's the highest percentage of renters of any age group," Kashif said.

In Penang, agents predict a 17 per cent increase in price in the next two years. Johor real estate agents predict 18.1 per cent price growth during the same period.

Agents in Kuala Lumpur and Selangor anticipate 15.9 per cent price growth over the next two years, while agents in Sabah anticipate 14.7 per cent price growth.

"We have been doing the Juwai IQI Index and Survey since 2019, and these numbers make up the most robust residential price growth forecast we have yet recorded. The forecast has changed significantly since the third quarter of 2021. Then, agents anticipated a 5 per cent decline in residential prices, and events proved they weren't far off.

"One reason that agents are so bullish on the real estate market is that they are overwhelmingly optimistic about the economy. Fourty-five per cent of agents believe the economy will be somewhat stronger or much stronger during the next six months," Kashif said.

Bank Negara Malaysia predicts that the Malaysian economy will continue to improve this year, with GDP (gross domestic product) growth reaching 6.3 per cent.

This economic activity will be boosted by the reopening of international borders and government investment projects.

"Malaysia's first quarter GDP growth rate of 5 per cent was high by global standards. That is faster growth than in China, the USA, and other major economies," Kashif said.