The Malaysian residential rental market experienced an increase in demand and supply despite the Covid-19 pandemic and the subsequent movement control order (MCO) periods, which had been expected to dampen sentiments.
Instead, rental platform Speedhome saw demand for rental units shoot up to pre-MCO levels in May 2020. Last month, Speedhome achieved an all-time high in sales with a 31% growth.
Similarly, iBilik, a popular platform for room rentals and short-term stays, also saw the most number of listings last month. The number of listings in June exceeded the total listings received from January to May 2020.
The high number of listings indicate an influx of supply for room rentals are available on the market. Since iBilik does not track enquiries or listings that are taken up, a possible indication of more demand is the increase in website traffic that is reaching pre-MCO levels.
A similar sentiment on increased demand has been echoed by property agents as well.
“We’ve been receiving a surge of enquiries by tenants looking to upgrade to a bigger space and also downgrading due to financial difficulty,” said Joseph Chan, a real estate negotiator and co-founder of Kith and Kin Realty Sdn Bhd.
Seamus Kor, general manager of Ant Hill Living Sdn Bhd & Vivahomes Realty Sdn Bhd, has also experienced a significant spike in rental demand for June.
Possible factors behind the surge
While property owners enjoy the automatic loan moratorium, the choice to discount or defer the collection of rent remains the sole discretion of landlords.
As businesses close or downsize and employees are made redundant or suffer pay reductions, implications of which may resonate in the rental market.
On the one hand, tenants struggling financially will seek to downsize to more affordable units or switch to room rental. And on the other hand, tenants seeking to upgrade to bigger spaces may now find landlords are more willing to negotiate prices.
“We found that the number of people who chose to terminate the contract early in April increased by 10%, mainly because the tenants can no longer continue to pay their rent.
“In addition, there are also many foreign expats who have already terminated their tenancy early, to head back to their home country,” said Speedhome CEO Wong Whei Meng.
Wong noted after the MCO was lifted, the number of tenants terminating their contract early had decreased significantly. “Currently, the early termination and the late rental payment numbers are back to normal”, he added.
“I believe the spike in demand is largely due to the reopening of the business which means people getting back to work and therefore need the rental space to occupy,” Kor told StarProperty.
Other more subtle factors may also have affected the rental market as the MCO and resulting ‘work-from-home’ culture realised the need for more space or privacy.
“Working from home has made everyone appreciate their home more than before and they are willing to invest to have a better environment and space.
“Travel distance to work is no longer the main requirement as many employers have still been encouraging work-from-home to mitigate the risk in the office,” said Chan.
Chan also noted that tenants were switching to newer premises with health and safety in mind.
“When there are newer options available, it is a norm for tenants to switch because they want something newer and a healthier environment.
“Price differences compared to older premises are marginal. In fact, some of the tenants will not mind staying further away from the city, as long they could get a newer premise with a better environment,” Chan mentioned.
Ultimately housing remains a necessity and as the loan moratorium ends, a high possibility exists that borrowers unable to continue furnishing their mortgages may opt to rent instead.