Although the oversupply of residential properties in Malaysia is “worrying”, it is expected to lessen over the next two years due market forces and measures by the federal government, according to Rahim and Co Executive Chairman Tan Sri Abdul Rahim Abdul Rahman in a report by The Star.
Based on data from the National Property Information Centre (NAPIC), the number of unsold homes reached 29,227 units with a combined value of RM17.24 billion as of 1H 2018.
“There are two schools of thought on how to deal with this. One, is that the local authorities can freeze development orders to curb the overhang. The other is to let it be driven by market forces. Let the market correct itself,” said Abdul Rahim.
He also clarified that the local housing market is not undergoing a recession.
“The current situation is not a recession, it’s just an oversupply situation. In this case, the developer needs to be prudent in what they are offering. It must be something that is sellable given the current market situation.”
“In Singapore, developers are actually fined if they don’t sell their properties within a specified time. This is why it’s important for developers to undertake due diligence or a feasibility study first, before launching,” noted Abdul Rahim.
Meanwhile, Rahim & Co real property agency director Robert Ang revealed that he doesn’t support a development freeze order to address the property overhang.
“Our economy is fairly matured and you should let market forces decide its direction, not impose restrictions on developers and investors.”
“Let developers sort themselves out. This can be done in the way of lowering rates or offering special packages. In business, you need to be smart.”
Abdul Rahim agrees, adding that home builders should defer launches or slow down their construction activity so that demand can eventually catch up with supply amidst the glut.
On the federal government’s plan to launch a property crowdfunding scheme by early-2019, he said it’s still too early to determine its effectivity.
“Very few countries have done this but we don’t know if it will work here. It’s a new concept and still in its preliminary stage. The question is how the public will accept it.”
Image source: The Star
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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