More residential properties were auctioned off during the first quarter in light of Malaysia’s sluggish real estate market, reported The Star.
According to Lee Heng Guie, Executive Director of Socio-Economic Research Centre, houses are typically long-term investments, but the owner needs to repay his mortgage to maintain ownership of the property.
“The weak holders and investors, facing financial difficulties to service their mortgage repayment due to low rental income, or were unable to sell in an oversupply market, may be subject to foreclosure by the banks. And so the property enters the auction market.”
Citing statistics from Auctionguru.com, he noted that 6,225 properties were auctioned off in Q1 2017, up 14.4 percent from the 5,442 units in the corresponding period last year.
By value, it posted a larger increase of 31.4 percent as RM1.8 billion worth of properties were sold by the online auction listing platform compared to RM1.37 billion in Q1 2016.
Meanwhile, Lee revealed that the country is currently facing an oversupply of houses after two years of contraction.
In 2014 and 2015, the supply declined by 12.8 percent and 4.2 percent respectively, but it grew by 30.7 percent to 14,792 units at the end of last year. Of this, 28 percent are condominiums.
A property consultancy’s research head, who wants to remain anonymous, claimed that the prevailing overhang is the ‘the longest” ever. Developers have also now started to realise that houses costing above RM700,000 are not easy to dispose.
“It takes time for developers to scale back on prices because they have already submitted their plans. They have to re-submit them if they want to lower prices because it will mean new designs/sizes,” she explained.
Moreover, the 14,792 units do not include serviced apartments, which are categorized as commercial properties since 2016. But if these are taken into account, the supply glut in terms of overall number and value is expected to be higher.
According to an official from the National Property Information Centre (Napic), they have been warning the government about the mounting supply glut since 2015.
“We have presented the numbers to different economic councils but developers keep pumping more and more units into the market and these new launches are priced at RM500,000 and above each. At the end of the day, we can only keep on telling,” she added.
Image sourced from The Star
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email radin@propertyguru.com.my
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