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An update of Malaysia property market. Just charts for reference.

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As a media, kopiandproperty.com was invited to the Property Market Report 2020 launching session yesterday. All the charts shown today are from Jabatan Penillaian and dan Perkhidmatan Negara (JPPH).

After looking through the softcopy slides provided, we have chosen a few slides which we believe gives us a sense of what’s happening in the market today. We get to understand if indeed the banks have stopped lending, if indeed people no longer wants to buy or even the persistent news about overhang properties in Malaysia.

Interest in residential property remains intact

In terms of people buying properties, we can see from the loan application image below that the value of the loan application has continued to show an increase every year since 2016 after a continuous drop beginning in 2013. In other words, there were three years where the loan application numbers showed a drop every year. That’s in 2014, 2015 and 2016 and in 2017, the loan application number has increased again and this has continued in 2017, 2018, 2019 and despite a year of many months of lockdowns, the number in 2020 is still higher than 2019.

Approval amount may not be what the applicant applied for

Of course, application does not mean it will be approved. The ratio of approval / application has also dropped from 43.2% in 2019 to just 35% in 2020. Do note that this is not the number of application but the value of the application. In other words, there may be situation where the loan application was for a bigger amount but the actual loan amount approved is lower. The banks does not follow selling price of the developer. It has its own valuation of the property and may only approve a 90% loan based on their valuation and not on the selling price.

malaysia property market

New launches continue to drop in both number and sales performance

There were just over 47,000 new launches in 2020 versus 60,000 a year earlier. We can think of it this way. The lower the number of launches meant that the developer is not so confident of the market or the developer is also just trying to sell their remaining units from earlier launches. So, can be negative or positive depending on your perspective.

We could see that the typical percentage of sales were usually above 30% and in fact was as high as 40% in 2019 (HOC helped tremendously of course). In 2020, it’s below 30 percent. We need to also understand that in 2020, there were many months where offices were unable to open and this includes sales galleries, lawyers’ office and even government agencies too. So, in this context, slightly below 30 percent is not really unimaginable. Just need to see 2021 for the clear sign if it’s still the same or recovery has happened. Q1 2021 data would be very useful.

Let’s look at overhang now

On an overall basis, numbers do show that the overhang numbers are trending downwards. It went up suddenly in 2018 from 24,738 units in 2017 to 32,313 units in 2018 but has gone down in 2019 to 30,664 and in 2020, it has dropped further to 29,565 units.

This was not all, the unsold under construction and unsold not constructed numbers also shown a decrease which I think we should say is positive for the market so that the overhang numbers do not keep increasing in the near future. As for the question of whether the overhang number remains elevated, the answer is yes, it’s DOUBLE that of 2016. So, overhang number is definitely high currently.

Deeper into each states, shall we?

Johor leads the pack for overhang units. it has 7,030 unit followed by Selangor with 4,889 units and then Perak with 3,637 units. KL is only 4th at 3,023 units, Sarawak at 5th with 2,458 units and Penang at 6th place with 2,069 units.

Let’s look at the price on an overview basis

Every time someone tells me the property prices are down, I always ask where. The answer would be ‘everywhere.’ I would smile and talk about some other topics. Seriously, if no one is forced to sell (like in a financial crisis), then the prices would just move slowly upwards, following inflation. The below is actual Malaysia Housing Price Index and it’s from 2010 till 2020. In 2020, there was an overall drop of 0.6% for semi-detach and drop of 0.8% for high-rise. These are average numbers yeah and does not mean every property drops by the same number.

The only property dropping in price is high-rise, they say…

If the high-rise unit was RM500,000 in 2019, it has gone down to RM496,000. A drop of RM4,000. Do not be too sad yeah because the years before 2020, the prices have appreciated by as high as 16% and as low as 0.6%. If you bought that high-rise in 2010, your gain in property price appreciation is still by far higher than the loss of RM4,000 from 2019 to 2020. Hope everyone realise that this is the state of high-rise and it’s not ‘all high-rise are dropping in price because there are too many units…’

Okay, end of part 1. Will post part 2 soon. Happy referring and anytime you like to refer again, do drop by. If you think this is useful for you, please do share with everyone else.

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