Rising Rentals: Pressure on Young People?

Malaysia’s rental market has reached a five-year high, driven by post-pandemic economic recovery, increased demand for rental properties and a surge in living costs. According to the latest IQI Malaysia Home Rental Index report, released by real estate giant IQI, national rental prices have risen steadily.

The Malaysia Home Rental Index, which analyses nearly 100,000 rental transactions since 2018, revealed that average national rents rose by 3.9% year-over-year, reaching an average of RM2,052 per month. This marks the highest rental levels since early 2020. However, the report also suggests that the market is stabilising rather than experiencing extreme price hikes.

Source: https://en.m.wikipedia.org

In Kuala Lumpur (KL) rents stabilised at RM2,847 after a volatile period, while Selangor rents showed a mild recovery. The report further states that the Malaysia Home Rental Index in the fourth quarter of 2024 (4Q24) reached its highest level since 1Q20, when the rental market suffered a decline due to the economic downturn caused by the pandemic. Compared to its lowest point in 2020, rental rates are now 24% higher, although they still remain RM442 lower per month than in 2019.

Rental prices grew by 2.8% in 4Q24 compared to the previous quarter and were 3.9% higher than at the end of 2023. This trend signals a return to pre-pandemic levels, though at a measured pace.

IQI’s forecast for 2025 suggests continued moderate growth rather than another major boom or crash. KL’s rental prices have fallen by 10.2%, marking the first annual decline in three years, primarily because:

·         High rental prices driving tenants away. Some renters may have sought more affordable alternatives in suburban areas. 

·              A surge in home purchases. Many tenants have transitioned to homeownership as real estate transactions hit a record high in 2024, according to NAPIC (National Property Information Centre).

Despite the 2024 decline, KL rents remain 35% higher than their lowest point during the pandemic. This suggests that while the market has softened slightly, it is far from experiencing a downturn.

In summary, Malaysia’s rental market has hit a five-year high, but growth is slowing. Looking forward, experts predict that rental prices will continue to rise moderately in 2025, in line with inflation and economic trends. While affordability remains a concern, tenants can expect a more predictable rental environment than in previous years. 

 Reference:

Rising rentals adding pressure to young tenants, Joseph Wong, Star Biz7, 30 Mar 2025