The state of property overhang in Malaysia? Too many articles and non-stop every other month and every quarter and every half-yearly too. Transaction numbers? Actually, it’s positive growth versus the year before BUT the newly completed units are still higher versus sold units yeah. Latest transactions here: Property transactions still going up We are not doing that awesome, I know. Perhaps we also get an update on our neighbour down south.
Article in themalaysianreserve.com According to the Urban Redevelopment Authority, the current overhang in Singapore is 31,948 units as at Sept 30. Sales are averaging 2,500 per quarter this year and using the same rate, it will take almost four years to clear the backlog according to Christine Li, head of research for Singapore and South-East Asia at Cushman & Wakefield plc.
Christine Sun, head of research at OrangeTee & Tie Pte Ltd said that sales may fall 5-10 percent next year though property prices could still rise between 1-3 percent. This is on assumption that the economy does not deteriorate excessively next year. More of the overhang units are in outlying suburban areas versus areas closer to downtown because the nearer to downtown areas have better access to top schools, shopping streets and the central business district are drawcards.
Developers are hoping that the government will wind back hefty stamp duties for foreign buyers as well as more time to sell the projects. Without more time, the developers will have to pay a levy of 25 percent. This levy is applicable to developers who were unable to fully sell all units within 5 years of purchasing the land. Please refer to the Article in themalaysianreserve.com
As I have explained before, there is little need to forecast what will happen to the property market of Malaysia. Advanced property markets will actually show the way. First is that overhang does not happen just in Malaysia but elsewhere and the major reason is due to the economy causing the demand to slow down.
Prices meanwhile will stay the same or even rising slowly BECAUSE no buyers are willing to sell at a lower price than they bought… Unless of course the economy deteriorates to such a negative situation that people start losing their jobs and thus the pressure to sell fast mounts. This is why it’s best to identify the property we like to buy and offer a price we feel comfortable versus waiting for the worst case scenario and everyone sells at the same time. At that time, should we buy or wait? Hmm… Lots of learnings from advanced property markets yeah.
Next suggested article: Danger is when property prices are below mortgage