Residential property overhang is always a concern. Somehow because of the high number versus years before, people postpone their property buying decision. Actually, I do not understand because if you are buying based on your needs, overhang has nothing to do with it. In fact overhang will help to make the property market to be more negative and this should actually help with better price and more freebies too.
So how positive or negative is the situation? H1 2020 saw an increase of 3.3% in the residential property overhang numbers. Look closely and we must note that within the whole H1 2020, perhaps only 2.5 months would be considered as months where property transactions could happen. January and February 2020 was okay.
March until May 2020 would be quite bad yeah. We can only count June as a half month since if we saw a property we love in beginning of June, we still need up to 2 weeks for the loan application. If you saw the property towards end of the month, it is highly likely that the transaction will only be completed in July… Thanks for contributing to H2 2020 transaction numbers yeah. Image below is from JPPH.
Residential property overhang numbers increased by 3.3% and total is now 31,661 units. 32% of these are priced below RM300k. Meanwhile Johor and Selangor would contribute 20% and 16% respectively to that overhang number. Fortunately both of these states are among the top three when it comes to property transactions versus all other 12 states.
In other words, there’s a chance that they (Johor and Selangor) could clear their respective residential property overhang numbers if the market were to recover. For Johor, the catalyst would always be how connected JB to SG is. Without the Rail Transit System (RTS), then the property market is likely to be muted.
Serviced apartment is a real worry. State governments better be very vigilant with approvals. There are currently 21,683 units in the overhang category and this has increased by 26.5% within H1 2020! 62% are priced above RM700k! By the way, just looking at the price could roughly tell us that these units are in more mature and popular locations. If it is not, then the unit size would have to be super huge yeah. This is highly unlikely yeah if you understand the reasons for serviced apartments.
The state where most of these serviced apartment overhang units are is in Johor as well. I do believe if you were to drive to JB, you would know where these over RM700k units are.
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Next suggested article: Overhang is incorrect. Perhaps unsold unit is a better term