We have often been reading about the Klang Valley property market. Here’s one recent one: High end KL condos, future looks brighter? More units coming Do we know what’s happening with the Penang property market? Here’s one article in TheStar quoting many property experts. In brief, Penang’s unsold supply of residential units are concentrated in the higher-end market with properties priced from RM500,000 onwards and in areas such as Mount Erskine, Tanjung Tokong, Batu Ferringhi, Sungai Ara and Bayan Baru. According to Raine & Horne Malaysia senior partner Michael Geh, the overhang in these locations does not come as a surprise because certain areas in Tanjung Tokong, Batu Ferringhi and Bayan Baru are prone to flooding. Some projects are near hillslopes. In fact, during the final quarter of 2017 when the rain storms wrecked havoc, the sales of properties near hill slopes and flood prone areas were badly affected. (Yes, I could still remember one desperate seller suddenly call a REN friend of mine and reduced his price by over 30 percent. The road in front of his landed suffered soil erosion…)
As for the term ‘overhang,’ the National Property Information Centre defines a property overhang as units which have been issued with the certificate of fitness for occupation (CF) and which had been on the market for more than nine months but remained unsold. There were 1,482 units of unsold units of residential properties priced from RM500,000 to RM1mil. Geh said, “A household would require at least RM10,000 income to purchase properties priced from RM400,000 and above. The median monthly household income in Malaysia is currently about RM5,228.”Geh then mentioned that the proposal to implement essential components of the Penang Transport Master Plan (PTMP) such as the LRT and Pan Island Link will boost the value of properties near the routes. Here’s that article in TheStar for reference. Here’s my earlier article about PIL. The best option for Penangites. Train vs Tram.
It is a worrying sign if most of the unsold units in the market are under the affordable segment. This may show that the demand is weak, probably because the people are not earning enough or may have lost their jobs for example. However, if the unsold units are under the luxury segment, it may meant that the supply is too many to be absorbed within a short period of time or that these wealthier Malaysians are a little more apprehensive about buying a unit; sentiment not that positive. Personally, I think we should worry more if the mass market (affordable segment) is in trouble because that would mean the whole Malaysian property market is weak. Yes, I am looking forward to the New Housing Policy 2.0 which has been in the news quite a lot recently. Hopefully it addresses most of the issues plaguing the market currently. Everyone should own a home, period. Happy waiting.
written on 27 Aug 2018
Next suggested article: Affordability of homes getting worse or better, now and future