Malaysia’s Property Overhang Situation To Remain Stable

July 27, 2021

Malaysia’s Property Overhang Situation To Remain Stable

Malaysia’s property overhang situation is expected to remain stable amidst efforts by developers to clear unsold completed properties at a reasonable price, said industry players.

CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen believes new launches will not significantly contribute to the overhang situation.

“Due to the uncertainties in the country’s economy and increasing unemployment, we do not disregard the possibility that property overhang may increase,” he told The Malaysian Reserve (TMR).

“However, we do not expect it to be significant because most developers have responded well to the change in the market trend since 2015.”

Where Is The Biggest Property Overhang In Malaysia? Find Out Here.

Chan expects the property market’s performance to continue to be affected by the hike in COVID-19 cases as well as the various lockdown restrictions imposed by the government, reported TMR.

The property market’s performance for the second quarter of 2021 (Q2 2021) is expected to be its worst due to the enforcement of Movement Control Order (MCO 3.0), he added.

Nonetheless, Chan foresees pent-up demand once the government lifts the MCO.

“Most prospective buyers are owner-occupiers that capitalise on the low interest rate and incentives offered under Home Ownership Campaign or by the developers,” he said.

“The young population or first-time house buyers will drive the demand for properties.”

In Q1 2021, the property market posted 80,694 transactions, with a total value of RM36.12 billion.

Dr Carmelo Ferlito, CEO of Centre for Market Education, revealed that the average transaction value in Q1 2021 stood at RM447,600, up 6.5% from Q4 2020 and 14.1% from Q1 2020.

All property categories posted a hike in average transaction value in Q1 2021 compared to the same period last year.

“This is happening despite very moderate price dynamics, in which the Malaysian House Price Index in 2020 recorded a slight growth of 0.6% when compared to 2019, the smallest increase in the past 10 years,” he told TMR.

“This confirms what we have said in previous occasions, which is that after the 2012 to 2013 peak prices were moving toward stabilisation.”

He expects the trend to stay until the next cycle inversion.

Despite a stable tendency towards price stabilisation within the property market, Ferlito said a final remark has to be spent on the rising inflationary tensions that are emerging in our economy.

He underscored that the prices of raw materials significantly increased internationally, while expansionary fiscal and monetary policies flooded the economy with liquidity that nobody can actually use.

With this, property developers may soon face increasing costs as well as a lower demand despite the stabilisation in prices.

“At the same time, the excess liquidity may turn a post-COVID boom into a malinvestment crisis, if not properly handled now,” he said.

“The property market will evolve into these confusing policies and economic environments. And it may further suffer if the situation is not properly addressed.”

 

Check out these latest project reviews today! Or read our helpful Guides to learn all about the various property buying, selling and renting tips!

POST COMMENT

You may also like these articles

Lower Property Prices To Address Overhang Situation

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 Campa

Continue ReadingJanuary 17, 2020

Market Needs At Least Three Years To Clear Johor Property Overhang

CBRE-WTW Managing Director Foo Gee Jen believes the market needs another three years to absorb the property overhang in Johor. The state posted the biggest overhang units for commercial and residenti

Continue ReadingMay 20, 2020

KPKT to explore alternative ways to overcome property overhang

The Ministry of Housing and Local Government (KPKT) said it will look for alternative ways to overcome the country’s property overhang situation other than levying a vacancy tax on developers who fa

Continue ReadingAugust 28, 2020

Unreleased Bumi lots account for 50% of Malaysia’s property overhang

Many completed homes in certain states remain unsold due to the refusal of the state government to release Bumiputera lots.In fact, unreleased Bumiputera lots account for around 40% to 50% of the prop

Continue ReadingOctober 2, 2020

Malaysia’s Property Overhang Woes To Persist In 2021

Rahim & Co International Sdn Bhd expects the number of overhang properties in Malaysia to remain high this year based on prices, locations and income level.Rahim & Co's Research Director Sulai

Continue ReadingJanuary 27, 2021

Feedback