Unsold homes highest ever in history. 50pct due to Johor, Penang and Kedah.

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There are a total of RM15.6 billion worth of RESIDENTIAL properties unsold as at end 2017. One of the many articles here. In terms of units, that’s a total of 24,738.  Please note that these units do not include service apartments and SOHO (small office/home office) units.  In the latest report by Bank Negara Malaysia (BNM), the central bank said there were 129,052 unsold housing units at the end of the third quarter of 2017 compared to 146,497 units at the end of the first half of 2017. (Well, at least this is sort of good news since the number is actually lower in Q32017 versus H1 2017)  The report says that more than 80 percent of the unsold units were priced at RM250,000 and above. (Frankly, even the affordable homes being built today are mostly targeted at prices between RM250,000 – RM350,000 anyway, thus the 80 percent is hardly surprising)  

The Valuation and Property Services Department (JPPH) in its Property Market Report 2017 said there is a rising concern on the overhang for residential units. In fact JPPH shared that, “These overhang numbers which only accounted for those in the residential sector — excluding serviced apartments, SOHO, etc — were the highest to be ever recorded.” These unsold homes are units which were unsold AFTER nine months having received its Certificate of Completion and Compliance. For the whole of 2017, a total of 194,684 transactions in the residential sector were recorded and valued at RM68.47 billion. When we include the whole property sector there were a total of 311,824 transactions valued at RM139.84 billion. Volume wise, it’s down by 2.7 percent and 3.8% in value when compared to 2016. (Hey, this meant that on an overall basis, the average transacted price is down.)

Just three states would contribute 50 percent to the total residential overhang and they are Johor with 4,378 units, or 17.7 percent, followed by Penang with 15.8 percent and Kedah with 15.3 percent. (Personally, I worry for Penang and Kedah because if we look at the size of property market on an overall basis, then these two would really have a very high number of unsold units.)  According to JPPH DG Nordin Daharom, there are new strategic initiatives involving JPPH, Napic and the National Housing Department through knowledge-sharing sessions. He said, “This knowledge-sharing process can help the government implement policies for new property developments and help reduce the rising number of unsold units across all sectors with reasonable pricing points.” Another relevant article in freemalaysiatoday here. 

UNSOLD UNITS meant a few key things. Some developers simply built without knowing if there is demand for the units.  Some properties may have been priced too high to begin with simply because the prices in the area is already within that range. Remember, when the market is slow, even a 5 percent difference would stop purchasers from buying. They would usually have many more choices than usual. Of course, some developers may not have been marketing the properties enough, preferring to believe that since they were able to sell previously, there is little need to push for sales right from the beginning. Some would say that this is because the market is slow, so the properties were unsold. Well… do take a look at a few launches recently which were sold out in hours. The right price and a pretty good property will still be sold, fast. This is the market we are in today. Happy viewing and buying.

written on 18 April 2018

Next suggested article:  JB is right after KL. Homes still too expensive


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