On and off, we would come across reports about how unaffordable has property market Malaysia become. In fact, we have been said to be unaffordable for quote some time. Read here: Severely unaffordable, worst than Singapore, Japan and USA – US based Demographia On a more recent note, this was also highlighted by our very own Khazanah Research Institute. It is definitely not a rosy picture. Read here: To be affordable, KL homes must be RM280,000 There are also many property experts telling us to pay ever higher for properties nearby malls, MRT or even in great locations because prices will keep rising. Well, recently it was reported that of all the overhang units in 2015, 50 percent were for homes below RM300,000!
Overhang properties are defined by the government as properties that are completed and issued with Certificates of Fitness for Occupation (CFO) or Temporary Certificates of Fitness for Occupation (TCFO), but remain unsold despite having been put on the market for at least nine months. Of course, we would now think that they were unsold because of the prices, right? Well, not really. Just look at the image. Properties priced at RM500,000 and higher comprised of just around 32 percent of total overhang units in 2015. Meanwhile homes below RM300,000 accounts for around 50 percent of the total.
If Malaysians need more affordable homes and they need more of those below RM300,000 then why are they unsold? A few developers involved with these cheaper homes told me that many times, it’s hard for the buyers to get their loans approved. Somehow, it is this group of people that would find it hardest to save enough for a roof over their heads. Besides that as usual, it would also depend on where the property was located, lack of public transport or even due to the design.
I think these unsold units should not be allowed to maintain their status. Helping those who needs a unit is vital and the government would need to do more. As for location, perhaps building higher density in better locations would help too instead of building somewhere far away. Secondly, with more LRT and MRT stations, more areas would eventually be accessible. Another reason would also because of the units allocated for the Bumiputera quota. Any unsold units will take some time to clear because the mechanism for the release is different from state to state. It’s time to be both effective and efficient. Happy buying some of these overhang units.
written on 26 Apr 2016
Next suggested article: BNM: Risk of oversupply is real within the next 2 years