MALAYSIA’S housing needs are determined by population growth and household size formation. Therefore, the demand for property will slow down without sufficient population growth.
Despite the country’s population growth rate remained stable at 1.0% with population increased from 29.7 million in 2020 to 30.0 million in 2021, data shows that Malaysia’s population growth rate is becoming slower each year.
From being at 2% in 2000, the natural population growth rate went down to 1.8 % in 2005, and then slipped to 1.72% in 2009. In 2010, it declined further to 1.6%, followed by 1.3% in 2011 and 1.2% in 2016.
“The decline in population growth is quite normal for developing or developed nations,” Ho Chin Soon Research Sdn Bhd chairman Ho Chin Soon told FocusM in an interview in 2019.
In fact, this phenomenon is not unusual and its being experienced in almost every developed country around the world. One good example is southern neighbour, Singapore which is seeing fewer citizens tying the knot.
Ho added that when people start to earn more on top of having a lifestyle to maintain, their desire to have children will decrease.
In addition, as it is expensive to start a family and to raise children, modern couples prefer to have smaller families. Subsequently, this contributes to the drop in natural population growth.
“In the future, the population will drop if not boosted by immigrants,” Ho remarked.
Demand and supply mismatch
Meanwhile, the median age of population for Malaysia last year was 30.26 years.
“This shows that young population will continue to support the property sector because this is the age group that will be looking to buying a property of their own,” REI Group of Companies CEO and co-founder Daniele Gambero told FocusM in 2019.
The reason why the current “population of age” is not buying homes, Gambero added, is due to a mismatch between demand and supply.
Young people mainly young starters need affordable homes due to their low income but what is being built or completed are not within their price range, especially those in Klang Valley.
In addition, banks have tightened their housing loan requirements in the recent years, making it more stringent in giving out financing to young homebuyers.
Meanwhile. life expectancy at birth of Malaysia has seen a dramatic increased from 65.01 years in 1971 to 76.36 years in 2021, growing at an average annual rate of 0.33%. And Malaysia’s ageing population is expected to hit 5.6 million by 2035.
On this matter, Gambero stressed that the kind of properties to be constructed then should suit this age group as this represents 15% of the population make-up by 2035 which represents a huge target market for developers in the future. – Aug 22, 2021
