Property Price is up 20% and rental has doubled!?

Property Price is up 20% and rental has doubled!?

Of course this bad news for tenants and great news for property owners is not Malaysia. Any home owner who told you that he / she managed to double the rental meant that he / she was renting at an unbelievable rental previously. Probably due to effects of Covid-19 pandemic and lockdowns. Some homeowners were forced to give heavy rental discounts. Some owners were forced to sell way below their asking prices too.

Everything depends on the ‘stronger’ party

However, think a little. If property prices can increase by a lot, that means home owners have more negotiation power or the home buyer? Whatever answer you have, think what will happen to the relationship between the home owner and the tenant. Who would have a stronger negotiation power then? Your answer will reveal why this is now happening in Turkey.

Article in nst.com.my Consumer inflation is at 61 percent. Housing Costs are up 20 percent within the past year. Industry data has shown that rents have doubled.

Experts say that the demand for housing outstrips supply. A yoga instructor wanted to rent her own place but she was told that her offer is unrealistically low. After learning of this from the real estate agents, she said, “To be able to afford these rents, I need to stay at home and not spend anything else.”

Data from real estate website EmlakJet and from competitor Sahibinden analysed by Bahcesehir University shows rents nearly doubled over that period – but evidence on the ground suggests even that is an underestimate. Please do refer to the article for more information and details. Article in nst.com.my

Need an answer about long term negotiation power?

As long as more new homes are built versus new demand, the negotiation power stays with the tenants. They can tell the home owner that it is easy for them to move to another place if the home owner decides to increase the rental. The home owner would also have to follow their demands too. Just look at the demand for properties during the Covid-19 lockdown periods. The home owners were truly under pressure from their strong tenants. In fact some tenants did not suffer any financial difficulties but still insisted that the home owners give them discounts.

On a longer term basis, with the help from inflation, property prices do slowly inch upwards. When this happens, the rental would also slowly move upwards too. Today, there are already home owners who is creating extra rooms and renting out the rooms separately versus the whole house. Would be good to think why they could do this and why people would rent these small rooms with just a bed and a desk and willingly pay rental for it…

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