CBRE-WTW managing director Foo Gee Jen believes that lowering property prices is the only way to address Malaysia’s property overhang situation. This comes as the government’s Home Ownership Campaign (HOC) did not offer much help in clearing up the oversupply.
“There were about 35,000 overhang units of residential property as of December 31, 2019, but only 2,000 units have been cleared, even though the government statistics showed over RM20 billion worth of properties were sold under HOC,” he said.
“It means there are a lot of new launches that were sold, so the HOC does not really help in clearing up the entire overhang.”
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He noted that there are also about 20,000 unsold units of serviced apartment/Soho/ Sovo commercial property.
“In Klang Valley, if there is no major correction of prices in serviced apartment /Soho/ Sovo, it would take over the next five years to be cleared (the overhang units).”
“While for residential units, there are still hopes for the prices to go up as it could hedge against inflation for long-term perspective, that would probably take two years to clear,” said Foo.
With this, he suggested for Malaysians to emulate the Europeans such as those living in London where they bargain property prices even in the primary market, reported Bernama.
“You (Malaysians) should also earn your rights, it is your own money and you decide what you want to pay for and do not follow the herd mentality.”
When asked if the government should control the launch of new properties due to the oversupply situation, Foo explained that the government could not restrict the market.
“Everything is on business, and it is on a supply-demand basis, the market should decide it. Housing is a basic necessity and I don’t think the government should put too many hands to control it, let the market decide.”
Looking ahead, Foo expects Malaysia’s property sector to be very flattish this year.
“I do not think the strong number of RM23.2 billion sold under the HOC in 2019 would be repeated this year and I expect growth of the landed residential properties would remain flat at about 5%.”
He also expects high-rise properties to witness a price major correction this year.
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