PETALING JAYA: The massive property overhang in Malaysia cannot be solved unless corrective action is taken by the developers themselves.
According to Zerin Properties Sdn Bhd group chief executive officer Previndran Singhe, (pic) the root cause of the problem was the “enthusiastic building and launching” by property developers, without proper market studies and analysis of what buyers want, and can afford.
“All these, of course, were already in the change but were accelerated in early 2021,” he said in a statement yesterday.
Previndran pointed out that the majority of the overhang units were residential properties in the RM500,000 to RM1mil range.
“As you can observe, the overhang in Klang Valley grew by 8.48% in terms of number of units or 12.88% in terms of value.
“This is of course due to a lot of previous property overhang and I see it increasing as the properties launched in 2019, which were already part of the problem, come into the picture,” he added.
Nevertheless, despite the soft property market conditions and the Covid-19 pandemic, Previndran highlighted that residential demand in the Klang Valley had remained steady.
This is indicated by mortgage approval trends for residential properties that have continued to rise.
The steady demand for residential units was mainly driven by strong digitalisation by property developers, price readjustments to suit the affordability of buyers and new launches that were adapted to what the buyers wanted.
This was further boosted by Bank Negara’s move to maintain the record-low overnight policy rate of 1.75% and the ongoing Home Ownership Campaign.
“In terms of value of transactions, there was a fantastic growth of about 28% in the first quarter of 2021 (Q121) as compared to Q120 and in terms of volume, there was an increase of about 19.5% in Q121 as compared to Q120.“We truly have a resilient market,” according to Previndran.
He said that the property market is witnessing a strong pent-up demand from the buyers.
“Despite the struggling economy, high net-worth individuals (HNWIs) and ultra HWNIs are paying top dollar for properties that “otherwise would not be in the market.”
They are also looking at opportunistic deals in the high-end locations, stated Previndran.However, the main artery and the pump of the residential market is the below RM500,000 range properties. Such properties are sought-after by the country’s burgeoning middle class market.
Previndran also said that additional demand is coming from the “pricing overhaul of the overhang”, referring to the discounts ranging up to 45% for unsold properties.
“Another trend that we are seeing is that new planned supply is skewing towards landed properties,” he added.