Malaysia has one of the highest urbanisation rates in Southeast Asia.

Single housing is becoming increasingly prominent in Malaysia’s real estate market today. This trend has a number of implications that are driving changes to suit the evolving needs of many Malaysians. Developers are building smaller homes to meet the demand of single buyers as the number of single-person households in the country has steadily increased due to shifting population priorities.

Rising urbanisation is a major factor driving the single-housing demand. Malaysia has one of the highest urbanisation rates in Southeast Asia, with over 75% of the population moving and living in the cities. This trend is highly unlikely to change as the population grapples with rising costs of living, inflation and the scramble to make ends meet.

There is also an increasing number of working women in the Malaysian workforce. According to the Department of Statistics Malaysia (DoSM), female participation in the labour force has been on a slow but steady increase, rising every year in the past 14 years with 2020 being an exception. It climbed from 46.4% in 2009 to 55.6% in 2019 before dipping slightly to 55.3% in 2020. However, the participation rate in 2021 rose again to 55.5% and further increased to 55.8% in 2022. The higher the number of working women, the more they stray from traditional old-school lifestyles to become independent and financially stable. More women are purchasing property and investing in the real estate market compared to before.

Speaking of straying from the norm, there is also a growing acceptance of single living in Malaysia. Plenty of first-time home ownership programmes have been introduced in recognition of the growing trend, such as the My First Home Scheme (Skim Rumah Pertamaku), PR1MA Rent-To-Own Scheme, Selangor Smart Sewa to Ownership Scheme (2STAY) and Selangor Rent-To-Own Scheme (RTO). All these programmes have options for singles to peruse as part of the government’s commitment to encourage home ownership no matter one’s marital status.

Driving demand for smaller properties

However, there are also negative consequences to the trend towards single housing from the property market’s perspective. There will be an increased demand for smaller properties, such as studio apartments and one-bedroom condominiums. Unfortunately, smaller properties do not necessarily mean cheaper when it comes to strategic locations combined with city prices. In addition, most smaller units are sold at a higher price per sq ft (psf) than their bigger counterparts. To make matters worse, the annual assessment rates for the smaller units are also higher, putting additional pressure on the home owners. “The annual assessment rates are calculated based on the estimated annual rental value of the property,” said Kuala Lumpur City Hall. Other councils follow the same formula even if the unit may be the only size that the buyer can afford.

What about affordable housing? Single households are more likely to be on a lower income than married couples who can combine their incomes. This will inevitably lead to a greater demand for affordable housing options, which the government is already struggling to keep up with. The competition for smaller, affordable properties will pose difficulties for many to secure their own homes. Not to mention the higher pressure on housing prices that will ensue.

Some singles may also choose to rent rather than buy a property. Settling down may not be a priority as of yet, or they may not have the financial resources to purchase a home within their budgets. It is important for developers to keep up to date with the latest property trends and plan their developments accordingly.

The ball is in the buyer’s court now

The single housing trend is likely to lead to a more diverse property market. In the past, the property market was dominated mostly by single-family homes. However, the single housing trend is creating a demand for a wider range of housing types like studio apartments, one-bedroom condominiums and co-living spaces. Malaysia’s real estate market has increasingly been adapting and offering such properties to potential buyers, and will likely continue to supply as long as there is the demand for it.

It is also likely to lead to a more vibrant rental market. Since more people are choosing to rent rather than buy, there will be greater demand for rental properties which will hopefully contribute towards the country’s effort to lessen property overhang. This will benefit landlords and could also lead to the development of new rental-only housing projects.

Single housing could also have a positive impact on the Malaysian economy. As more people move into smaller and more affordable properties, they will have more disposable income to spend on other goods and services. This could boost the retail, dining and entertainment sectors drastically, especially thanks to the increasingly prevalent eating-out culture spreading throughout the nation.

All in all, the single housing trend is a positive development for the Malaysian property market. It is creating demand for a wider range of housing types and could lead to a more dynamic market that strays away from the norm. If done right, Malaysia could see higher home ownership rates among its younger population along with reduced property overhang.

This article was first published in Starbiz7.