,View of houses in Island Glade, Penang in June 2021.
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KUALA LUMPUR: Signs of financial distress in the country are getting more prevalent and clearer as the Covid-19 impact bites deeper into Malaysia’s economy, resulting in rising unemployment and shrinking incomes.
The Statistics Department’s May 2021 data showed that the jobless rate was at 4.5%, involving over 728,000 workers, although it dropped marginally from 4.6% in April 2021.
The economic impact has not been isolated, rather the damage is spreading to other sectors, including property despite the various relief measures and loan moratoriums.
The Household Income Estimates and Incidence of Poverty Report 2020 revealed that 20% of the middle 40 (M40) income group – those earning between RM4,850 and RM10,959 – has shifted down to the bottom 40 group due to the pandemic, while among those from the top 20 category, 12.8% has shifted down to the M40 group.
This means some property owners may have to offload properties to stay afloat.
While the vaccination rate which is on track to achieve herd immunity by October 2021, the future remains unclear as to how fast the economy can recover from the damage.As of Aug 8, 2021, over 24 million doses of Covid-19 vaccines have been administered in Malaysia under the National Covid-19 Immunisation Programme or PICK.
By percentage, this means that 48.3% of the country’s population have received the first dose of the vaccine while 26.9% have completed the full two doses.
Christopher Tan, 47, is one of many property owners who have had to let go of their properties during the pandemic.
As global travel came to a halt, Tan, who resides in Singapore, lost his job as a pilot in June last year.
To sustain his livelihood with his wife and two children, he had to offload his apartment in Cyberjaya last August.
“It was a difficult decision to make but that was the fastest way to get some cash although it was at a loss. I bought that apartment for RM826,000, but sold it at only RM450,000,” he said.
At the end of 2020, the home loan rejection rate in Malaysia stood at 28%, according to data by Bank Negara.
Among the reasons was that borrowers were already highly indebted, and have a poor credit history with little residual income after taking into account monthly living expenditures and existing financial obligations.
According to the National Property Information Centre (Napic), in 2020, the overall property sector recorded 295,968 transactions worth RM119.08bil, which was a 9.9% year-on-year (y-o-y) decline in volume and a 15.8% drop in value compared with 2019.Meanwhile, a total of RM117bil is expected to be withdrawn from the Employees Provident Fund this year, largely through the i-Sinar and i-Citra programmes.
The fact is, even before the pandemic, the property sector was already facing the issues of oversupply and overhang and for the longest time, Malaysia has been known for its house prices being unaffordable compared with the average income level – a combination of factors that has knocked prices off a little.