More affordable housing making its way to market
Kenanga Research says the property sector continues to improve based on what it sees dissipating concerns over affordability...
KUALA LUMPUR: Will Malaysia's residential overhang improve further this year?
Property overhang refers to properties that remain unsold nine months after their launch.
The National Property Information Centre's (Napic) said in its property market report for the first half of 2023, that the overhang situation improved during the market recovery period.
The number of unsold units fell 5.3 per cent to 26,286 units valued at RM18.3 billion from 27,746 units valued at RM18.4 billion in the second half (2H) of 2022.
Condominium/apartment units made up nearly 58 per cent of the residential overhang, while in terms of price range, almost half were priced at more than RM500,000 per unit.
Johor continued to have the highest residential property overhang with 4,717 units, followed by Selangor with 4,307 units. These states recorded overhang values of more than RM4 billion each.
According to Sr Samuel Tan, executive director of KGV International Property Consultants, the overhang decline of 5.3 per cent in total volume and 0.6 per cent in total transaction value for the landed residential sector indicated that developers were making more efforts to clear unsold stocks.
About 32.5 per cent of these overhangs are priced between RM500,000 and RM1 million.
"This group also accounts for 34.3 per cent of those launched during the same time period. One possible explanation is that the location of some of these projects is less popular.
"Overhang in the serviced apartment segment has also decreased. For the same corresponding periods, total overhang volume decreased by 6.2 per cent while total value decreased by 5.3 per cent.
"Again, these are encouraging signs. However, in the serviced apartment segment, 65.7 per cent of the overhang is between RM500,000 and RM1 million. Developers must be cautious not to build in these price bands if there is no demand," he told the New Straits Times.
Tan pointed out that many of these overhangs are unsold units that have not yet been built, accounting for 62.3 per cent of the residential sector.
The proportion of unsold units under construction in the service apartment segment had decreased from 16.4 per cent to 10.8 per cent.
"Another reassuring factor is that the unsold and unbuilt portion is 34.3 per cent. If the response is negative, developers may choose not to develop them. This will prevent the service apartment sector's overhang from worsening," he said.
