Govt intervention won’t fix housing prices

 

■ Every adult should sensibly secure a home as everyone needs a roof over their head ■ Residential properties in prime locations undergoing ‘shrinkflation’, with sustained higher prices despite new units getting smaller

Greyscale low angle view of a highrise building with glass windows under sunlight

THE indirect discussion on multiple-home ownership between Housing and Local Government Minister Nga Kor Ming and former Cabinet member Khairy Jamaluddin over various media channels has ignited interest among Malaysians.

The latter wondered on his podcast Keluar Sekejap last week if limiting property purchases could help alleviate the crisis in affordable housing by addressing the surplus of unsold high-end homes that contribute to inflated prices.

Nga countered by dismissing the proposal, arguing it is not the government’s role to restrict investments in the real estate sector, which has proven to be an effective hedge against inflation and a means of wealth preservation.

He cautioned that such restrictions could harm the property sector and negatively impact some 200 industries connected to real estate, including contracting, plumbing, banking and legal services.

From a foreign perspective, if one were to speak to ordinary Hong Kong residents, it would come as no surprise to find that opinions are mixed on tycoon Li Ka-shing, the billionaire founder of CK Hutchison Holdings Ltd.

Although Li – whose name is synonymous with wealth in the former British colony – is a highly regarded businessperson, many in Hong Kong put the blame for the city’s exorbitant property prices on ultra-rich individuals like him, who made their fortunes by flipping properties in the densely populated region.

In fact, there is a local saying that goes:

“The houses in Hong

Kong are not meant to be inhabited.

They are meant to be ‘fried’ (slang for flipping at a higher price in Cantonese).”

This, of course, is in addition to the fact that most

Hong Kong residents live in high-rise units that can feel claustrophobic.

This may explain why many of them enjoy being out on the streets as long as possible, even into the early hours of the morning.

Back home, if one were to drive around our own cities of Kuala Lumpur, Petaling Jaya, Georgetown and Johor Baru, one can’t help but notice the significant number of high-rise residential buildings under construction.

This prompts one to ask a pressing question: Who is actually buying these units?

In addition, it is reasonable to wonder if property investment is truly so lucrative, what will happen to the prices of these high-rise accommodations in the future, especially in view of the government’s goal to encourage homeownership among the youth?

In fact, just a couple of months ago, before Khairy’s comments on his podcast, this writer – who has never advocated for socialist practices in any way – had wondered out loud to his spouse whether the government might need to step in and limit the “frying” of residential property prices.

So, is Malaysia heading in the same direction as Hong Kong?

At first glance, maybe not, but a deeper look may reveal a different story.

Reports in The Star earlier this week indicated that Malaysian residential properties in prime locations are undergoing “shrinkflation”, characterised by a sustained increase in property prices even though new units are getting smaller.

This trend places a heavier burden on buyers, especially on young Malaysians intending to buy their first home.

However, property prices and social responsibilities aside, it is easy to understand why investing in real estate is so attractive: for one, it is more tangible than stocks, bonds or mutual funds, and the thrill of monthly rental collection appeals to those seeking regular returns.

On the other hand, equities and bonds are much easier to liquidate, and there is significantly less legwork involved as members of the public do not normally run the companies whose shares they own, as opposed to property owners who bear the cost of maintaining their assets.

Furthermore, for those interested in steady income, there are blue-chip banking stocks that offer healthy dividend yields, often with lower upfront costs compared to real estate.

Seasoned investor Ian Yoong, whose portfolio regularly achieves a compounded annual growth rate of 23%, believes that Malaysian property prices have increased at a healthy rate over the past few decades.

He points out that restricting residential-property ownership could suppress prices, ultimately discouraging investment in the sector.

“Malaysia’s property market overhang improved slightly in the first half of 2024 (1H24) compared with 2H23, with the total number of unsold units falling by 12.3% and their aggregate value declining by 19.5%.

“The current property overhang itself will cap the rise of residential property prices over the next couple of years.

“The government should therefore not impose any limits on home ownership,” he tells Starbiz 7.

Yoong emphasises that the current property overhang will naturally limit the rise of residential property prices in the coming years.

He advises the government to refrain from imposing any restrictions on homeownership, as doing so could hinder market growth.

A cursory check supports Yoong’s claim, revealing that high-rise residential property prices in many areas of Kuala Lumpur and Petaling Jaya have stagnated compared with 15 to 20 years ago, when the property market was experiencing a boom.

This is despite the completion of both Mass Rapid Transit (MRT) lines 1 and 2 in recent years, which many investors felt could have improved prices, particularly in neighbourhoods near the MRT stations.

While it is understandable that Yoong would prefer to invest in equities given his success and the comparatively less field work, he strongly advises every Malaysian adult to obtain a home.

“Save for a down payment and apply for a bank loan to buy a residential property that is within your means. It matters little whether it is a lowcost flat or a terrace house.

“While this might not be the best investment strategy, it is a sensible move. Every adult needs a roof over their head,” he says.

Yoong says that the monthly loan repayment acts as a form of forced savings.

He stressed that in reality, not everyone is meant to be a successful investor, but almost everyone can be a property owner.

“Once home ownership is out of the way, one can then focus on investing surplus funds in shares, properties, cryptocurrencies and the like,” he advises.

KEITH HIEW keith.hsk@thestar.com.my

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Ai revolution in property industry

 

The AI market is projected to be worth RM1.77 trillion by 2027 AI’S ability to predict market trends will transform property valuations

The real estate industry, traditionally known for its complexity and high-stakes decision-making, is undergoing a radical transformation as artificial intelligence (AI) takes centre stage. With continued investment in AI, the sector is set to become even more efficient and responsive, redefining client relationships and setting new standards of excellence across the industry.

The real estate industry, traditionally known for its complexity and high-stakes decision-making, is undergoing a radical transformation as artificial intelligence (AI) takes centre stage. From property search and recommendations to valuation, management and maintenance, AI is revolutionising how professionals and clients interact with the real estate market.

The projected growth of the AI market, expected to reach Us$407bil by 2027, speaks to the increasing role AI is set to play across real estate functions, marking a pivotal shift in the industry.

In this new age, leading real estate firms like Jones Lang Lasalle Incorporated (JLL) are harnessing AI’S vast capabilities to streamline processes and make real estate more accessible, transparent and data-driven.

With the introduction of JLL’S groundbreaking AI platform, JLL Falcon’s Ai-powered solutions, it is clear that AI is reshaping real estate and elevating industry standards across the board.

One of the traditional challenges in real estate has been helping buyers find the right property to match their specific needs.

Ai-powered algorithms are aiding the search process by analysing vast amounts of data to provide personalised property recommendations. This is just one way AI is making the search process faster, more efficient and highly targeted.

Predictive analysis

AI’S ability to predict market trends is also transforming property valuation. Automated Valuation Models (AVMS) allow real estate professionals to access real-time property values, assess risk factors and identify market opportunities more precisely.

By leveraging predictive analytics, developers can even tailor property designs and amenities to align with customer demands.

These capabilities are invaluable, especially in fluctuating markets where rapid, data-backed decision-making can yield significant returns.

With Virtual Reality (VR) and Augmented Reality (AR), AI is further enriching the real estate experience by offering immersive tours of properties, enabling buyers to visualise spaces in detail without setting foot in them.

On the local front, many Malaysian property developers and real estate agencies have already integrated VR to allow prospective buyers to walk through properties virtually, gaining a comprehensive view of layout and design. This enhanced decision-making tool reduces time on the market and helps potential buyers envision their future homes with confidence, even from afar. however, the next stage of AI deployment is still in its infancy due to the technical expertise and high costs required for implementation.

As a result, it is currently restricted to larger players who have the necessary resources.

Operational efficiency

In property management, AI is proving its value by simplifying maintenance processes, reducing costs and enhancing tenant satisfaction. By integrating Internet of things devices with AI systems, property managers can monitor conditions like temperature, energy use and air quality in realtime. AI also facilitates predictive maintenance, scheduling repairs before issues become costly problems. This approach not only reduces operating expenses but also ensures a more seamless experience for tenants, as maintenance is managed proactively rather than reactively.

hence, it is little wonder that big real estate firms like JLL are pushing the industry further into the future with the launch of its JLL Falcon, a comprehensive AI platform designed to fuel innovation and provide data-driven insights. JLL Falcon combines JLL’S proprietary data with generative AI to help commercial real estate (CRE) professionals maximise returns while keeping costs manageable.

JLL Technologies chief executive officer Mihir Shah highlighted the platform’s far-reaching potential: “JLL Falcon will serve as the foundation for the continued innovation of products and services that help shape the CRE industry.” With capabilities such as natural language processing, semantic understanding and advanced analytics, JLL Falcon is helping CRE professionals make more informed decisions in realtime, powering applications ranging from tenant management to property analytics.

One of the most exciting aspects of JLL Falcon is its integration with JLL GPTTM, the first generative AI assistant crafted specifically for the CRE sector.

Launched in 2023, JLL GPTTM has already seen rapid adoption across JLL’S workforce of 47,000 professionals. By analysing curated datasets, JLL GPTTM helps generate insights that enable real estate professionals to offer customised solutions to clients.

Recent upgrades to JLL GPTTM include advanced image processing and a significant expansion of its working memory, making it a powerful tool for streamlining client consultations and creating data-backed strategies.

Other real estate players are following suit as such integration marks a step forward in enhancing efficiency across individual firms’ functions and setting a new industry standard for data-driven insights.

A global trend

The rise of AI in real estate is part of a broader trend where technology adoption is accelerating across the globe. In JLL’S 2023 Global Real estate Technology Survey, over 80% of occupiers, investors and developers shared plans to increase their real estate tech budget over the next three years.

As technology continues to evolve, Proptech solutions are paving the way for even greater AI integration, allowing functions like investment management, construction and facility operations to benefit from advanced analytics and predictive insights.

With such solutions, real estate professionals are now able to navigate industry challenges with greater confidence, using databacked strategies to deliver tangible value.

As AI tools’ analytics continue to drive value, the property industry is entering a new era of innovation. From creating more streamlined search experiences to supporting data-driven property management, AI is transforming how real estate is bought, sold, managed and experienced.

With continued investment in AI, the sector is set to become even more efficient and responsive, redefining client relationships and setting new standards of excellence across the industry. In this era of digital transformation, AI has integrated itself as a strategic partner, revolutionising how the real estate industry operates and paving the way for a smarter, more connected future.

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Curb appeal can enhance a home’s value

15% increase in a home’s value if it is wellmaintained and landscaped ■ 88% faster sales when a home is staged for prospective buyers ■ 8 seconds for the buyer to decide whether they want to view the interior

First impressions matter and this could not be more true when it comes to viewing a home with a prospective buyer.

in the fast-paced Malaysian real estate market, properties are constantly competing for attention, often relying on their curb appeal to stand out.

Curb appeal is frequently overlooked but it can significantly influence a property’s market value and the speed at which it sells. Homes with strong curb appeal typically spend less time on the market.

When a potential buyer first sees a property in person – rather than through an airbrushed photo online – their reaction can go one of three ways: they may be impressed, left scratching their head or even horrified.

this initial, often subconscious, impression will heavily influence their decision to explore the interior or move on to the next listing.

studies show that buyers often make snap judgments about a property within seconds of viewing it. A home’s value can increase by up to 15% if it is well-maintained and landscaped.

A welcoming facade can instantly capture attention and create a positive first impression.

Conversely, an unkempt or neglected exterior can deter potential buyers and negatively affect the property’s perceived value.

What is Malaysia’s unique curb appeal?

Malaysia’s curb appeal is uniquely influenced by its rich cultural heritage and tropical climate. traditional Malay homes, adorned with intricately carved wooden details and vibrant colours, offer a charm that captures the essence of the region.

Chinese and indian architectural styles also contribute to this aesthetic diversity, creating a harmonious blend of influences.

in recent years, sleek, modern minimalist designs have gained popularity, often integrating natural elements and emphasising sustainability, reflecting a growing appreciation for both elegance and environmental consciousness.

regardless of the architectural style, maintaining an inviting exterior is essential in Malaysian culture. Lush greenery, clean lines and a sense of organised beauty are highly valued.

imagine a manicured lawn bordered by vibrant flower beds, with neatly trimmed hedges framing the property – this greatly enhances a home’s overall curb appeal.

Investing in exterior pays off

Landscaping is a crucial element of curb appeal. A well-maintained lawn serves as the foundation, providing a backdrop for colourful flowers, eye-catching shrubs and majestic trees that add both colour and texture to the landscape.

Mulching garden beds not only nourishes the soil but also creates a polished, tidy appearance, giving the home a well-cared-for look.

the choice of exterior paint is another important factor in a home’s aesthetic appeal.

selecting colours that complement the architectural style and blend with the neighbourhood can create a cohesive look.

timeless neutral tones like soft white, warm beige and muted grey evoke a sense of elegance and calm.

A fresh coat of paint, especially when details like window frames and doors are refreshed, can breathe new life into a home’s exterior.

Driveways and walkways, often overlooked, can also dramatically affect curb appeal.

An uneven or cracked driveway is an eyesore but resurfacing or repainting these areas can restore their charm.

regular cleaning and removing debris ensure a pristine appearance, while power washing can remove dirt and grime, bringing surfaces back to their original condition.

the front door is the focal point of a home’s exterior.

Choosing a bold colour or unique architectural design can make a striking first impression.

Upgrading the hardware or adding stylish lighting fixtures can further enhance the door’s appeal, drawing the eye and inviting curiosity.

Lighting is another critical component of curb appeal.

thoughtfully placed outdoor lighting can highlight the home’s best features, even after dark. illuminating walkways, gardens and the front door not only improves safety but also creates a warm, welcoming atmosphere.

Finally, decluttering and organising exterior spaces is essential.

removing clutter from the front porch, driveway and garden fosters a clean and inviting environment that will impress potential buyers.

A well-maintained exterior reflects the care and attention given to the home, making it a truly appealing space.

Different property types, different jobs

For many Malaysians who live in condominiums, professional landscaping is typically managed by the property management in the common areas.

the landscaping needs of each condominium differ and professional landscapers provide unique solutions based on the property’s requirements.

Whether it’s planting pathways and installing lighting for safety, designing play areas for children, or creating relaxing spaces with shaded seating areas, their expertise ensures that the outdoor spaces meet the residents’ practical needs while also looking beautiful.

A home’s curb appeal is a powerful tool that can significantly impact its market value and the speed of its sale.

By investing time and effort into landscaping, exterior paint, driveway and walkway maintenance, front door enhancements, lighting and decluttering, homeowners can create a lasting first impression that draws potential buyers.

in the diverse and vibrant landscape of Malaysian real estate, curb appeal is a key factor that differentiates properties and attracts discerning buyers.

By understanding the cultural nuances and architectural styles that define Malaysian homes, homeowners can enhance their property’s aesthetic appeal and create a welcoming environment.

Embracing the power of landscaping, exterior upgrades and thoughtful design ensures that a property stands out in the competitive real estate market.

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US Election Day voting begins amid fears of violence, unrest

Shrinking homes, rising prices

                                                                                                                    CLICK TO ENLARGE

PETALING JAYA: More young property buyers, especially those about to start their own families, may be forced to purchase their first homes in the outskirts of the Klang Valley, such as Rawang and Dengkil, as residential properties in prime city locations suffer from “shrinkflation”.

Shrinkflation refers to the sustained increase in property prices even though new units are smaller than they used to be.

While analysts and industry observers generally welcome Budget 2025’s homeownership measures, the consensus is that more needs to be done because many younger generation workers still find it difficult to buy their first property.

Licensed financial planner Stephen Yong said the supply of affordable housing, particularly in urban areas with manageable commutes, is limited.

ALSO READ: Homes beyond the reach of most M’sians

“Buyers would usually need to save up to 25% of the property’s price to pay for costs like down payment, legal fees, renovations and furnishing – all of which pose a considerable financial burden.

“Young Malaysians also encounter hurdles in securing housing loans due to lower income levels, rising expenses and strict debt service ratio requirements.

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“This difficulty is even more pronounced for freelancers and gig economy workers, as banks often impose stricter conditions on applicants without stable, predictable incomes,” said Yong, who is also the executive director of Wealth Vantage Advisory.

The National House Buyers Association (HBA) opined that there is a need to define “affordable housing” to ensure the term is “not abused” by property developers who deem prices of RM500,000 as “affordable”.

ALSO READ: ‘Lock in perks for higher-priced homes’

Its honorary secretary-general Datuk Chang Kim Loong said the government has previously reiterated that affordable housing must meet three criteria: for it to be priced between RM150,000 and RM300,000; must have a minimum built-up of 800sq ft (excluding balcony space) and have at least two bedrooms; and must be located in areas with good public transportation links and amenities.

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“Whatever schemes are introduced will not make houses affordable if prices are not checked and costs (of doing business) are not addressed.

“Let’s face it, owning a house is beyond the reach of most Malaysians. We need to address the root cause and not pander to parties that caused the hike.

“HBA hopes that the current Housing Minister will always put the interest of the rakyat and country first before the interest of housing developers,” said Chang.

Rahim & Co International Sdn Bhd estate agency chief executive officer Siva Shanker said he welcomes Budget 2025 measures to promote homeownership, especially first-time buyers.

“However, the measures announced are not substantial enough,” he said.

ALSO READ: Tax relief timing for first-time home buyers is crucial

Among the measures announced in Budget 2025 was a RM5bil step-up financing scheme introduced under the Housing Credit Guarantee Scheme (SJKP), which offers a lower repayment rate in the first five years of the mortgage term.

SJKP will also guarantee loans for first-time home buyers of up to RM500,000 for homes developed on wakaf land. To support individuals purchasing their first home, Budget 2025 also proposed an individual tax relief on mortgage interest payments.

There is also a tax relief of up to RM7,000 for residential properties valued up to RM500,000, while a relief of up to RM5,000 will be given for residential properties priced between RM500,000 and RM750,000.

This relief can be claimed for three consecutive years of assessment on sale and purchase agreements completed between Jan 1, 2025, and Dec 31, 2027.

Siva said the real problem affecting first-time homebuyers, especially the bottom 40% income earners (B40), is the difficulty in securing a down payment for the housing loan.

“When you apply for a 90% housing loan but the bank only approves 80%, it means you need a down payment of 20% from the house value. Many people don’t have the cash in hand.

“Perhaps the government can consider a policy where banks will provide 100% loans for first-time B40 homebuyers,” he added.

Malaysian Youth Council executive committee member Eow Shiang Yen said Budget 2025’s step-up financing scheme indicates the government’s commitment to easing the financial burden of the youth.

“However, the success of this scheme requires interactions of other relevant components such as improved financial literacy, building passive and secondary incomes, relevant competence development and competitive salaries,” said Eow.“The youth still need to cope with increasing living costs and other expenses. A strict supervision and ongoing enforcement are also required to ensure that initiatives such as People’s Residency Programmes, People’s Housing Projects, and Rumah Mesra Rakyat are not misused.”

Yong concurred with Eow on the need for financial literacy to make homeownership a reality for young Malaysians.

“In addition, incentives like stamp duty reductions, first-time homebuyer grants, and flexible loan structures with extended tenures would make homeownership more accessible,” he said.

Commenting on the proposed tax relief on mortgage interest payments, Chang said it should be given to all existing homeowners with outstanding housing loans, not just first-time buyers.

The three-year tax relief should start from the date of property handover instead of the date of sale and purchase agreement, he said.

“The tax relief on interests should be applied strictly for first-time buyers irrespective of purchasers from housing developers or from the secondary market or sub-sale,” he added.

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