Unsold units continue to dampen property market in Malaysia

The slowdown in the property market is getting more apparent as we see the number of unsold units in both residential and commercial properties climb by 16 per cent...
Kuala Lumpur City Centre (HDR). Malaysia, 2012.

The slowdown in the property market is getting more apparent as we see the number of unsold units in both residential and commercial properties climb by 16 per cent in the first quarter of this year.

According to the National Property Information Centre (Napic), 18,908 of the 81,894 units of residential and commercial properties launched in the first quarter of 2016 have yet to be sold.

These unsold properties amount to RM9.4 billion and it is an increase of 15.9 per cent from the value of unsold units in the fourth quarter of last year.

“The market is indeed softer compared to a few years ago and this is due to macro-economic factors that are affecting the country now,” Real Estate and Housing Developers Association (Rehda) Institute chairman Datuk Jeffrey Ng told Malay Mail Online.

He said the move by Bank Negara Malaysia (BNM) to strengthen the policy for banks to disburse loans because of growing household debt also did not augur well for first-time homebuyers.

“The cost of living has gone up, purchasing power is no longer strong, so whether it is to buy a property or any goods at the mall or to go for a holiday, it has become difficult because the overall velocity of Malaysians’ spending is affected,” Ng added.

Therefore, the buying activity, he said was expected to remain stagnant if not lower and this would increase the number of unsold properties in the country.

Napic’s market report for the first quarter of 2016 showed that most of the residential units (11,542) launched were priced between RM500,001 and RM1,000,000.

As for commercial units, including Small Office-Home Office (SOHO) and serviced apartments, in the same period, the report showed that most of such properties (4,808) launched were priced between RM250,001 and RM500,000.

The total number of unsold units for both types of properties (2,558 units for residential and 590 units for commercial) in the aforementioned price categories also chalked up the highest among other price ranges.

The data also singled out Johor as having the most number of units launched as well as the most number of units unsold.

The state recorded 8,605 launches, of which 2,663 units worth RM1.7 billion have been left unsold.

Putrajaya, Labuan and Perlis, according to the data, did not record any new launches for 2015 as well as the first quarter of 2016 for residential units.

“It is not like there is no demand for properties, especially for homes, because the younger generation wants to own a home but they cannot afford the price these days,” Ng said.

Datuk Jeffrey Ng said the property market is softer due to macro-economic factors coupled with a strict lending policy enforced by Bank Negara Malaysia. ― Picture courtesy of Rehda InstituteDatuk Jeffrey Ng said the property market is softer due to macro-economic factors coupled with a strict lending policy enforced by Bank Negara Malaysia. ― Picture courtesy of Rehda InstituteNg, who is also Sunway Reit Management chief executive, said developers cannot sell properties at a lower price either, because the price of land and construction materials have gone up.

“This, coupled with external economic factors like the slump in the oil price and depreciating ringgit, is hampering both developers from reducing the price of properties and buyers from owning one.

“Hence, the government must step in to formulate a stimulus to restore the situation,” he said.

Ng said Rehda, many times in the past, has submitted proposals to the government via the relevant ministries to address the situation.

He, however, did not reveal details of such proposals, saying that he was not authorised to divulge such information to the public.

Like Ng, Fiabci Malaysia vice president Erick Kho, who also pointed to the global economic crisis as a factor for the increase in unsold units, said the introduction of the goods and services tax (GST) in April 2015 also affected the property market.

“The introduction of GST is an added burden to the challenging environment and rising living costs, resulting in only those with cash being able to make purchases,” he told Malay Mail Online.

One of the ways to overcome this slowdown, Kho said, is for developers to become more sensitive to the market and focus on “what consumers want rather than what reaps more profit.”

He too called for the government to amend policies to allow first-time homebuyers some leniency in obtaining bank loans.

BNM enforced a strict debt-to-income ratio for loan qualifications to address the country’s growing household debt, but the move has been criticised for causing applicants to be disqualified from mortgages due to their combined repayments.

Another Fiabci vice president, Michael Geh, said developers were now going back to market demands.

“Those who return to market demands did very well, they can get the sales. For example, Semenyih Setia sold quite well and the Templer Park project also sold quite well.

“Many developers are also downsizing their project plot sizes… changing their development designs to make it more affordable.

“The developers are also actively creating easier buyer entry schemes where buyers pay 10 per cent first, and then only pay the balance when the project’s OC (occupancy certificate) is obtained,” he said.

Such moves, Geh said, were effective measures that have been adopted by several developers to ensure the recovery of the market.

 

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