Can T Sell Homes Rent Them Out Instead Economist Tells Developers

---

Amid the property overhang, developers should turn landlords to get some cash flow in, says economist Carmelo Ferlito.PETALING JAYA: An economist has suggested that developers turn landlords and rent out their unsold units amid the current property overhang
Carmelo Ferlito, from the Institute for Democracy and Economic Affairs (IDEAS), said developers have no choice but to bite the bullet as many properties remained outside the affordability of Malaysians
Recently, Bank Negara Malaysia said that the prices of homes were “seriously unaffordable” by international standards, where a house is deemed affordable if it is priced not more than three times the annual household income
The central bank’s financial surveillance department director, Qaiser Iskandar Anwarudin, said the average price of a newly launched home is RM417,262 while the maximum affordable house price nationwide is at RM282,000
Ferlito said although the glut of homes is not necessarily a result of greed but rather poor decision making, developers need to rethink their strategies
He said he did not agree with calls for lending rules to be relaxed as this could affect the banking sector and household debt
“We want to avoid a subprime-style crisis,” he said, referring to the US subprime crisis in 2008 triggered by a spike in foreclosures as borrowers defaulted on loans they could not afford
Ferlito said developers could hold on to their unsold properties and wait for the market to pick up again by offering rent-to-own schemes although prices were unlikely to drop to the point they fell into the so-called affordable category of RM300,000
“For the unsold stock, probably one solution is for the developers to become landlords, to start renting out the unsold units and at least get some cash flow in.”Meanwhile, National House Buyers’ Association (HBA) secretary-general Chang Kim Loong said people should not be against the idea of renting if they could not afford a home
“There is no shame in renting, and aspiring house buyers should continue renting until they are financially ready to buy their dream home,” he said
He said that as the economy is still considered to be slow, it is still a tenant’s market and that prospective homeowners should find the best rental deals while saving up to buy a property later. - FMT

---