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Affordable housing to worsen the unsold units?

Posted in Property, KL / Selangor, and Starting Property Investing

Can unsold units get worse? Well, it seems to be nearing the bottom,some say. Worst over for the property market? Or getting worse? Well, here’s another Interesting article in EdgeProp.my “Affordable housing influx may worsen overhang situation.” As reported by The Edge weekly – A growing supply of affordable housing – variously defined as priced below RM500,000 to below RM200,000 by different authorities and consultancies – by public and private entities threatens to keep overhang units undigested.  It quoted an unnamed analyst saying this, “You’ve got an increasing overhang and a growing number of launches, but demand is relatively flat, and now the market is being flooded with affordable housing products. So, what will happen to the unsold inventories?” The analyst ended with this conclusion, “So, a potential question down the road is whether there is a need to regulate affordable housing supply. Right now, there is no control on supply.”

Personally, let me ask this question. If the property was in a bad location and it was not sold last year and nothing has changed, should it be sold this year? Secondly, if the property is seen to be too expensive for its quality and size and was unsold last year, should it be sold this year? We assume everything else remains the same. Third, the design of the property was bad, it was not practical at all and yet priced slightly above the market price for similar properties in the same location and it was not sold last year. Should this property suddenly become attractive this year? I think the answer is a firm NO, unless circumstances changed. For case 1, a new interchange connecting some secluded projects for example. For case 2, perhaps the developer offered a very comprehensive renovation package which meant huge savings even if price remains the same. For case 3, the developer used interior design to revitalise that ‘ugly’ project. Well, if circumstances changes, then there’s a chance for the property to be sold. IT IS NOT because of some new launches of affordable properties which will cause those problematic properties to be unsold.

By the way, it’s important to note that I have no idea if demand is flat ( I do not know majority of potential buyers) or low but I only know that attractive new launches at great pricing continues to achieve high take ups and usually they were sold out within the first few hours. Recent ones? 100 percent sold out terraced homes or even this one which is in a location considered far by many.  I also know that statistically speaking, Malaysia needs more homes and not less. This is just based on the current population growth and the current launches. About the unsold units? We still need more units, actually  We have yet to count all the son-in-laws who were forced by their father-in-law to buy a property before getting married… New launches have to be really attractively priced. Offering rebates after launching at a high price is no longer attractive because many buyers are already comparing different projects today and everyone knows that banks may not lend up to 90 percent for homes which they (banks) deemed to be overpriced. There is little need to push the blame to new affordable home launches. If those are not attractive enough, they would also become unsold units for an ever longer time. Malaysia’s not in a crisis. Thus, only bad and unwanted new launches would add to the unsold units total.  Happy viewing and buying.

written on 24 April 2018

Next suggested article:  Still true, “property prices too high.”

 

 

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2 Comments

  1. Warrick Singh
    Warrick Singh

    -Well analysed and end of the day as rightly pointed out the property overhang appears to be a problem of mismatch albeit affordability
    -I believe you had in one of your earlier blog posts recommended that a central authority oversees plans that accentuate the correct products are built to avoid poor financing margins
    – really wonder how the overhang situation is going to pan itself out as its estimated that there is a mixed bag of close to 150k unsold properties

    April 24, 2018
    |Reply
    • kopiandproperty.com
      kopiandproperty.com

      Thanks Warrick. Overhang needs solution but the solution is not be stopping affordable launches…

      April 24, 2018
      |Reply

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