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Population and Property. It has to be in the same theme.

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Without sufficient population growth, the demand for property will be slowing. Not in the immediate future but it meant that the need for ever more properties will not be coming true. The median age for Malaysia is still 29. Yeah, a very youthful country. Earlier article here: Median age for Malaysia is still below 30. With most Malaysians getting married later, it meant that demand for properties will continue to change. A couple setting up a family may not be comfortable staying in a small suite for example.

With regards to the population growth versus the property numbers, the following is a very informative article from themalaysianreserve.com The report said there is a general mismatch between affordability and homes built and offered in the market today. The Malaysian Reserve (TMR) looks at the housing supply and population of each state in the country.

Federal Territory of Kuala Lumpur (KL)
KL has a population of 1.8 million people. Total existing stock is 482,099 units with another 37,819 incoming units and 67,177 planned homes. Serviced apartments wise, KL has 60,441 of its existing units with 31,455 incoming units and 82,057 planned units. KL has a total of 4,731 units under overhang status worth RM4.6 billion.

(Based on existing population versus the number of completed homes, it’s around 3.3 persons to a home. For KL, I think this number is pretty high. I will say majority of friends I know who came to KL to work are not staying with their families, thus the number of pax in a home is usually less than 3.)

Putrajaya has a small population of 90,000 people according to the Statistics Department of Malaysia as at 2018. As at Q1 2019, Putrajaya has a total of 21,574 housing stock; including 12,612 existing supply, 7,500 incoming supply, and 530 planned units of residential properties.

(Based on just the existing supply, we can see that the ratio of population to a home is 7. In other words, the population in Putrajaya are cramped up into one home or they are actually staying outside Putrajaya?)

Selangor has a population of 6.47 million people. As of Q1 2019, Selangor has 1,540,905 existing stock of residential properties, 118,603 incoming and 78,099 planned supplies. In terms of serviced apartments, Selangor has 60,805 existing units, 39,654 incoming and 26,193 planned supply.

(Based on just ratio of existing supply versus the current population numbers, the ratio is 4 to a home. Actually, just about right but if we are looking to the future, this ratio will only be going down. Selangor is also one of the states receiving lots of new migration from other states too.)

Johor has a population of 3.74 million people and a total of 1,120,527 housing stock as at 1Q19. It has 818,326 existing stock of residential properties, in addition to 68,263 incoming and 88,665 planned supplies. There are also 63,328 existing stock serviced apartment; 23,666 incoming and 58,279 planned supply of serviced apartments.

(Based on ratio of existing supply of homes versus the population, we could see a ratio of 4 people to a home. This is also not excessive which meant that the current property overhang issue in Johor is definitely due to mismatch in the types of properties versus the demand for them. Perhaps one major issue is the price of those properties)

The island has a population of 1.77 million people. Penang has a total of 590,582 housing stock as at 1Q19. This includes 511,613 existing stock; 42,913 incoming and 24,929 planned supply of residential properties. Penang also has 3,234 existing stock of serviced apartments, while 2,990 units are incoming and 4,903 units planned.

(Based on ratio of existing supply of homes versus the population, the ratio is 3.4 to a home. This revealed that the number of homes to the population where ratio is concerned is lower than Selangor, Johor and the number is much closer to Kuala Lumpur. Perhaps it’s best to ensure what’s built moving forward will be really what the people needed)

Sabah has 3.9 million people. It has a total of 226,912 housing stock, including 216,232 existing; 25,652 incoming; and 22,422 planned supply of residential properties. It has 1,215 existing serviced apartments, with 350 incoming and 1,041 planned supply.

(Based on ratio of existing supply of homes versus population, the ratio is an unbelievable 17.9 people to ONE property unit. Before everyone starts asking if there are anything wrong with the number, let’s be reminded that for many of the population, they may not be staying in the typical modern houses of today. They may be staying in long houses for example. It’s worth nothing that if the houses built are to the affordability of the people, the overhang situation should not be existing)

The report in TheMalaysianReserve covers all other states too. Please refer to it here.

There are also those who continue to tell the current generation that the next generation will not be able to afford a property, thus they better buy soonest. Thats not entirely true. Developers will always build only when the buyers are able to afford them. Thus, to manage the price, it will be further (where land cost is lower) or it will be smaller (if it’s in the city centre). Do not overstretch financially just to get a home. Remember, most of the time, the homes being built will adjust itself based on demand. Happy understanding that population growth will drive the property market growth and not the other way around.

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written on 14 Aug 2019

Next suggested article: Population growth, ageing nation. Ratio of homes to people.

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