A study has been conducted on the changes in rent prices in March 2019 to September 2019 and April 2020 that assess the impact on the real estate sector due to Covid-19. According to the report, households spend a quarter (23 percent) of their household expenditure on housing rent.
It also reveals that Male’ City, 60 percent of households lived in rented accommodation compared with only 31 percent of the households that resided in a dwelling unit that is owned by a member of that household.
The study reveals that the biggest change in the rental prices during this period (September 2019- April 2020) was a decline of 1.8% in 2-bedroom apartments. For many years, high rental expenditure has been a significant issue in Male` City. Although the pandemic has resulted in a reduction in the average rental prices in the city, many citizens continue to face difficulties in meeting living expenditures.
Nevertheless, initiatives have been taken in the island nation in an attempt to ease financial difficulties faced by the public. For example, Housing Development Corporation (HDC) announced postponing payment of 30 percent of the monthly rent for April and May. The Housing Development Finance Corporation (HDFC) granted a six-month extension on its housing loans during March, following six-month loan extensions by Bank of Maldives (BML).
What happened to the rental prices in other countries? The pandemic has reversed the rising property trends across Hong Kong, Shanghai, and Singapore. The rent prices are on the decline in Los Angeles and Orange County after nearly 10 years of rent hikes. Even in India, Mumbai rental prices fell by up to 25%.
The Maldives has a significantly high cost of living when compared to the average income of the population. When we compare it to a neighbouring country, the cost of living in Malaysia is 33.41% lower than in Maldives and rent in Malaysia is, on average, 65.24% lower than in Maldives.
The Maldives faces a significant housing problem, as a majority of the country’s population migrates to the capital for reasons such as better education, employment and health care. The City is extremely crowded and the demand for apartments has been increasing. The Maldives, with a population of over 500,000, is made up of 1200 islands, but more than 25% lives in the Capital City.
Housing Development Finance Corporation is the only housing finance institution in the country. Even with a commendable recovery record, the institution is unable to cater for the growing need due to limited finance available to the institution. According to the Ministry of Housing in 2008, with all HDFC’s initial capital invested in 20-year loans to 500 households, it can only provide an additional 25 households with loans each year in the future unless it can get an injection of additional funds.