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How many of us are looking to buy overhang property in 2021?

Overhang property would be properties which have been completed and remain unsold for 9 months. If the property is under construction, it is not part of overhang. If they property has just been completed, it is also not part of the overhang. So, it is definitely possible to say that any unsold property which has been completed may soon become overhang statistics. When it has remained unsold for 9 months. So, how bad is the overhang property in Malaysia? There was a recent infographics from thestar.com.my as below.

Total for overhang properties? (residential and commercial)

Total overhang units would be 65,552 and this is for both residential and commercial units. If we look at just residential and serviced apartments, then actual number is 55,195 units. This is considered as a huge number without any doubt. My question is, how many readers of kopiandproperty.com are now in progress of buying one of these overhang units? By the way, these overhang units usually comes with very good offers because developers have completed them and if they could sell, they would definitely do so. Question is, why is it unsold?

overhang property

Could the market bought the whole overhang if they wanted to?

In H1 2020 (6 months of which 2 months were under MCO…), total transactions ONLY for residential units alone is over 75,000 units. Take a look at the image below for the actual number. Just add the numbers for Q1 and Q2. What this number tells us is that IF the whole market prefers to buy the overhang versus new launches or from the secondary market, then the 55,195 units of overhang residential units is NOT enough to even satisfy the buyers for 2 quarters.

There are many reasons why they prefer other non-overhang units or even buying from the secondary market but suffice to say, the overhang number is not the issue. It is the attractiveness of these overhang units to the buyers. In other words, why are we so fixated on the overhang number if they are just not ‘good enough’ for all the buyers in 2020?

This is what Rahim & Co International said

Article in themalaysianreserve.com Rahim and Co International Research director Sulaiman Saheh said this about the overhang property.

“While this may be due to the pandemic’s effect, the persisting overhang numbers is evident of a problem that is yet to be tackled effectively.”

“However, properties that are located in urban areas are still receiving strong demand and are likely to alleviate this problem if prices are adjusted.”

“Overall, we believe that the number of unsold properties is unlikely to decline significantly this year. It may be stable but the numbers are expected to remain high.” Do read the full article here: Article in themalaysianreserve.com

Conclusion

By the way, please remember that IF overhang number is very small, it may also meant that the market may be buying everything that was launched as well. This is also not as good sign to have as it may be pointing towards speculative property purchase and in the long run, should some unforeseen circumstances happen, guess what will happen to the property market and the property price? I will be worried if that should happen. You should too.

Stay focused on WHY we wanted to buy in the first place. The overhang number is really just a distraction. If we bought the wrong property, no one could save us. Happy understanding.

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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