Despite that, public must take note that there has been significant increase in house prices

by S BIRRUNTHA / pic by TMR FILE

A STRONG recovery in 2021 over 2020 has indicated a return of consumer confidence and an improved property market in 2022, according to the Malaysian Institute of Estate Agents (MIEA).

President Chan Ai Cheng said more importantly, public must take heed of the fact that the house price index has seen a significant increase to RM320,000 compared to RM295,000 in 2020.

She cited MIEA’s latest property market report that the volume of transactions for 2021 rose by 1.5% to 300,497 units with a value of RM144.87 billion, a 21.7% increase over the same period last year.

“Though the percentage increase of 1.5% may seem small, it’s important as it signifies recovery.

“The last quarter of 2021 saw a sparked increase in the volume of transaction amounting to 99,462 units, which we believe could be largely due to the Home Ownership Campaign incentives which ended in December 2021,” she said in a statement.

Chan shared that in previous years, the residential sector was the strongest, contributing 66.2% with 198,812 transactions with a value of RM76.9 billion, while the agriculture sector recorded 18.9% and the commercial sector recorded 7.5% of transactions.

She said this trend remained same as in previous years, adding that the states that contributed sightly in excess of 50% of the total transaction were Selangor (61,507), Perak (36,893), Johor (36,145) and Kedah (25,077).

Meanwhile, Chan noted that in 2021, a total of 43,860 new residential properties were launched comprising 31,678 or 43.3% of landed properties and 13,182 or 25.9% of high rise.

She added that only 39.3% of the units were sold, resulting in an overhang of 36,863 units which is the highest in the last five years.

“This will be a great concern to developers as this affects cash flow.

“However, we need to caution buyers not to be overly alarmed by the rise in the overhang numbers as this may not be a reflection of how the property market is doing.

“Some properties are just not cleverly developed, hence there is poor demand and this has nothing to do with whether the market is doing well or not,” she said.

Commenting further, Chan noted that MIEA is of the view that the overhang is largely due to the lack of research resulting in the poor understanding on supply versus demand, mismatch on the type of properties price range that buyers are seeking in specific locations, etc.

She emphasised that local authorities should perhaps put a pause on similar developments in vicinity of high overhang units to allow time for the market to absorb the units or to relook into the development composition before approvals are given to proceed.

She also opined that it is time for the government to intervene by adopting stricter guidelines or standard operating procedures (SOPs) towards building approvals at the state level to provide check and balance, and not to waste resources which may run into billions.

Additionally, Chan requested developers who are struggling with overhang units to work with real estate agencies to help ease the sale of these units, especially small developers who normally use their own in-house sales team to market.

“Appointing estate agents to help is a logical choice as they are trained and have relevant experience.

“Be sure to only appoint those who are registered with the Board of Valuers, Appraisers, Estate Agents and Property Managers Malaysia,” she said.

She also advised buyers to always do their own research, and let location specific and type specific data guide their decisions when investing in properties.