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Oversupply = Unsold, true. Unsold is NOT oversupply, TRUE!

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I hope the title is clear enough for everyone who does not understand that the two words are different because they actually meant different things. I was speaking in starproperty.my expo in Starling Mall today. Crowd was good. 30-40 people were standing throughout my talk which is why I think property investment remains a favourite for many. However, many continue to be confused with these two terms. This is one major reason why so many people are concerned and adopting a wait-and-see attitude. They thought there’s an oversupply, so prices should be dropping. Many are even waiting for the units in popular mature neighbourhoods!

Oversupply – According to Cambridge Dictionary, this is the meaning of ‘oversupply’: a greater supply of something than is needed. How do we know if there are oversupply or not? Ask 10 of our good friends and another 10 colleagues who are below 30 years old this question. ‘Do they own a property?’ The answer is likely to be NO but if you probe further, they are looking to buy in the near future. By the way, 1 million civil servants do not yet own a property. Earlier article here. Last but not least, our Housing and Local Government Minister Zuraida Kamaruddin announced that there will be 100,000 units of affordable homes to be completed within 2019. (earlier article here) I am very sure her goal of 100,000 units were not because there is an OVERSUPPLY of homes in Malaysia…

Unsold – On a yearly basis, over 100,000 new properties are launched in Malaysia. The unsold units are MUCH LOWER than 50 percent… For some states like Selangor and Kuala Lumpur, the % is something to be proud about and not something to be frowned upon! Take a look at the image to understand the % of unsold properties after launchings. The current unsold stock is because the units were too expensive or were in locations not favoured by many. To better explain, it’s a mismatch in demand vs supply.

Before we buy, understand what we need. After that, be realistic. Out of 10 things we love to have, it’s perfectly fine to find an affordable place with 6 out of the 10 first. Let’s understand that when 10 / 10 of all the things we love are ALREADY available, the prices ALREADY factored in all these. If these areas are NOT yet so expensive, newer areas will have no demand, period. That’s why many younger friends said property prices are too expensive but when we point out some areas which are 10-15 minutes away, they would say that it’s too far or not the one they are looking for. Well, keep searching then. Happy understanding.

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written on 3 March 2019

Next suggested article: 13 things to check before buying a secondary high-rise unit

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