Napic data shows number of unsold property in the country increased by 41%
By FARA AISYAH / Pic TMR
Property developers are reacting to the growing pile of unsold units in certain parts of the housing market by slashing prices and providing easy purchase schemes for buyers.
Data released by the National Property Information Centre (Napic) showed the number of unsold property in the country increased by 41% to 21,000 for the first half (1H17) of the year compared to the same period last year.
The unsold units are valued at RM12.26 billion, with most of the value contributed by 7,300 units that are priced at half-a-million ringgit each.
While the numbers look alarming, property developers like VPC Alliance (M) Sdn Bhd MD James Wong said it is a temporary setback for the industry.
Wong said in an overhang situation, property developers will come out with innovative measures to clear their housing stocks.
“Among these, is providing zero-entry cost for the buyers or reducing the prices to clear the stocks. “The majority of our property developers are financially strong. So they will not be affected much by this temporary setback,” Wong told The Malaysian Reserve (TMR) yesterday.
Wong said the current overhang situation occurred because developers had built too many high-rise and strata homes.
He said the industry as a whole did not look at more landed properties, townhouses or cluster homes, which are in demand.
However other developers say there is a cause for concern that the property overhang has widened.
CBRE-WTW Sdn Bhd MD Foo Gee Jen said the Napic report is a wake-up call for developers, and some are already reacting by reducing margins to boost sales and service their bridging loans.
“The overhang happened because developers are putting wrong products in the market. Based on Napic’s numbers, you can see that the primary market has been focusing on the properties below RM500,000, while people go for properties under RM300,000 in the secondary market.
“Developers really need to do a big correction in this market and change their strategies. If they insist to build projects that are priced above RM1 million, then they are targeting only the 20% demand,” Foo said when contacted.
According to Napic’s residential property inventory, landed homes made up 70.4% of its share, while the remaining 29.6% are strata units.
Foo said that it is time developers to shift their products to meet the demand.
Firdaus and Associates Property Professionals Sdn Bhd MD Firdaus Musa said developers should slow down in launching new projects to the market and sell off their overhang units first to not worsen the oversupply situation.
He said the situation is not very alarming and the market is not crashing in the near future as there are still demand in the secondary market and affordable properties.
The Napic data, released on Monday, showed that residential secondary property continued to drive the overall market with 61.8% market share and 48.4% in value.
Affordable houses continued to be in demand with more than 83% of the residential transactions within RM300,000 and below.
In a challenging market condition, the number of new residential launches was reduced to 28,397 units, down by 9.1% compared to 31,257 units in 1H16.
Sales performance was low at 23.9%. Most of the launches was in the RM400,000 to RM500,000 price range with a sales performance of 28.9%.
However, VPC’s Wong said the slowdown in the market is not alarming as the Bank Negara Malaysia and financial institutions have put in place several checks and balances to tighten lending for housing loans, in order to curb speculations.
“With this tightening of housing loans, the property bubble situation will not happen. This slowdown in the market is partly due to the wait-and-see attitude of buyers because of the upcoming 14th General Election,” Wong said.
He said the property market will start to see some recovery next year.
PPC International Sdn Bhd MD Datuk Siders Sittampalam concurred that the real estate industry will start to see some improvement in 2H18.
“Budget 2018 maintains the status quo of the stringent financing requirement. The total volume of supply coming in acts as a self-mechanism for the market correction.
“It is not something we need to be alarmed about. But, any fear instilled in the market will definitely give a negative impact to it,” Siders said.
According to Napic property market brief for 1H17, the overhang units increased by 41% to 20,876, while the value increased by 43% to RM12.26 billion compared to the corresponding period last year.