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Q1 Property Market Malaysia: Negative or Positive?

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Malaysia’s Q1 Property snapshot. What’s up and down? What’s bad and good?

Hot from the oven yeah. Perhaps we start with the not so great news first? The 5 states with the highest number of residential overhang is as below. In (bracket) would be the total residential units sold in Q1 2020.

Johor leads, followed by Perak. While Selangor and Kuala Lumpur is next, the situation is different. Need a bit of good news?

#1: Johor – 5,468 units (813 units)

#2: Perak – 4,919 units (5,344 units)

#3: Selangor – 4,844 units (11,202 units)

#4: Penang – 3,043 units (2,748 units)

#5: Kuala Lumpur – 2,586 units (2,421 units)

Look closely to understand why I added in the total residential units sold within the same quarter yeah. For example, Selangor has a total overhang units of 4,844 as at Q1 2020 BUT every quarter, total transacted units was more than 2 times the current overhang. Briefly, if the overhang properties were made more attractive, it could be quickly sold… So, I leave it to you to guess why some of these units remain under the overhang category yeah.

Kuala Lumpur residential overhang numbers is meanwhile almost the same as total transacted which meant that if we annualise the total transactions using the same number, then total transacted units are 4 times higher than the overhang number. This is why every time someone talks about how bad the overhang situation is, I tell them it’s best to understand the numbers based on states instead.

Let’s now look into the SUPPLY side (below image). Specifically, look under Residential. Overhang numbers are dropping by close to 10%. This is good news. The Unsold Under Construction is down by 12.4%. In other words, after some units are completed, there are fewer additions into this category. This is positive to help in changing the negative sentiment about overhang. However, it’s not necessarily a good news yeah. Especially if market suddenly turns around and there’s not enough supply.

Moving further, if we look at unsold but not constructed, this is also showing a significant downtrend. It has dropped by 17%. Again this may seem like a good news for the market since this meant that as long as the current overhang continues to decline, the actual overhang number will continue to decline. Supply has slowed significantly… If you are thinking of property investment, perhaps best to start viewing units yeah.

Image source: http://napic.jpph.gov.my/portal

Happy understanding that sentiment is due to the market. (earlier article about sentiment here) Current negative sentiment is because of a high overhang number. Meanwhile below market value properties could only be found by doing research and due diligence. Cheers.

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Next suggested article: Too early to know if property prices would be falling

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