THE number of property overhang is projected to remain high in 2021 based on income level, location and price, as consultant firm Rahim & Co International Sdn Bhd expects the market to undergo another challenging year.
Research director Sulaiman Saheh said in the third quarter of 2020 (3Q20), there were 57,390 units of unsold completed homes involving residential properties, serviced apartments and SoHo worth RM42.49 billion.
He added that three states, namely Johor, Selangor and Kuala Lumpur, still have the highest number of unsold completed residential units in Malaysia, with 33,000 units, 8,700 units and 7,800 units respectively.
Sulaiman stressed that other states such as Perak and Penang also reported a high number of unsold completed homes of around 4,000 units in each state.“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,” he said in a virtual press briefing of the firm’s Property Market Review 2020/2021 yesterday.
He cited that a noticeable trend in the property market right now is that developers are offering more discounts on their projects, in addition to the Home Ownership Campaign 2.0.
“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,” he noted.
Meanwhile, CEO of real estate agency at Rahim & Co, Siva Shanker, who was also present during the virtual briefing, said the availability of the Covid-19 vaccine could help reduce the problem of overhang in the property market.
He also concurred that the overhang problem will not decrease significantly, as the country has a fairly high number of completed homes that are unsold.
Nevertheless, he said the residential market can be expected to recover slightly driven by the success of the vaccine rollout in the country.
The latest Rahim & Co report found that the entire property market recorded 204,721 transactions worth RM80.71 billion in the first nine months of 2020 (9M20).
It saw a decrease of 15.8% in volume and 21.6% in value compared to the 9M19.
The report said this has ultimately restricted the momentum of the recovery of the real estate sector which was seen to start between 2018 and 2019.
Additionally, it said the spread of the Covid-19 pandemic has brought further disruption and barriers to the country’s real estate market in 2020 and made the situation even more challenging.
As the largest segment of Malaysia’s property market, the residential sector saw a decline in the 9M20 by 14.3% in volume and 14.8% in value compared to 9M19.
However, the report said the 3Q20 began to record an increase in volume and value of transactions following the Recovery Movement Control Order (RMCO) phase.
Whereas, it added that construction activities faced obstacles and delays in term of completion period due to the MCO implemented in March last year.
As a result, there were only 64,080 units of total completed properties in 9M20, which is a decrease of 33.4% from the corresponding period last year.