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When overhang property shows a rising trend

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Unsold property is defined as overhang after keys are handed over and they remain unsold for 9 months. So, total unsold property is not equal to total overhang property. However, many may think they are the same and that’s really an issue. Furthermore many people love bad news, thus media just wanted to satisfy what they wanted to read.

Unsold property may also include homes which are in progress, homes which has yet to start construction but has obtained the Advertising Permit and Developer’s License (APDL) and homes which has just been completed but is still unsold and is still owned the developer. Actually, I personally know some developers continue to hold a lot of units which they have completed and yet still unsold. Yes, some of these units are already classified as overhang property too.

Below is a very clear image showing the overhang property over the years. From 2008 until 2020. What’s very clear from the image is that the overhang property used to comprise of just homes which are RM500,000 and below. Then, the RM500,000 to RM1 million homes within this overhang property started to increase and soon, it reached 11.6% in 2014 and this has continued to rise until 30.5% in Q2 2020.

Image source: edgeprop.my

The chart comes from an article by Dr. Foo Chee Hung in edgeprop.my It’s a very comprehensive article and have a lot more details for our reference. Do read it yeah. It’s here at an article by Dr. Foo Chee Hung in edgeprop.my

Panic starts now?

Before everyone start to panic, let me tell you about 2008. In 2008, there really are not that many units which are above RM500,000. However, homes priced at RM500,000 or higher started to become popular at the time. When some developers were able to sell these RM500,000 or higher priced units, more developers jumped in and the units being offered suddenly increased.

This is also the reason why the number of these properties priced above RM500,000 continued to increase. Today, RM500,000 home is quite common and I dare say that even homes which are in the suburbs are also around this price today. Those within planned townships are usually priced higher than RM500,000.

As for the overhang property, let’s be objective yeah.

Read this recent article to understand too: How many of us are looking to buy overhang property in 2021? Staying focus on what we need. If it’s a home for our growing family, please see beyond the price and look into the size too. If it’s to rent out to students, then it’s important that there is a private university nearby. A local university may not provide the same kind of potential tenants. It does not matter whether the property is from the overhang market, the primary market, the secondary market or even the auction market. As they say, any property which meets our needs and expectations is a good property. Haha. “They” here is Charles Tan lah…

All the best in your property in vestment journey.

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