Residential property glut worsened in 2017 but prices continued to rise

KAJANG: The overhang in the residential property market may have worsened last year, increasing by 67.2%, but it has not worked to bring house prices down, with the Malaysian House Price Index increasing by 6.5% year-on-year to 187.4 points, driven mainly by terrace houses.
According to the Valuation and Property Services Department (JPPH), the volume of residential overhang grew by 67.2% to 24,738 units while value grew even higher at 82.8% to RM15.64 billion in 2017.
In terms of residential overhang, Johor was the highest, accounting for 17.7% (4,376 units) of the total national overhang, followed by Penang at 15.8% (3,916 units) and Kedah at 15.3% (3,783 units).
Unsold units were mainly strata-titled homes priced above RM500,000 in Johor Baru and Penang, while unsold units in Kedah were two- and three-storey homes going for between RM300,000 and RM400,000, throwing a spotlight on the issue of housing unaffordability.
In Kedah specifically, the JJHH’s National Property Information Centre (Napic) highlighted that the number of unsold unit was threefold more than that in 2016, while prices were five times more than that seen in 2016.
Despite the high number of unsold units, housing starts increased by 14.4% to 133,592 units while new planned supply rose by 24.5% to 132,731 units.
“As at year-end, there were more than 5.4 million existing residential units, with another 480,892 units in the incoming supply and 448,199 units in the planned supply,” it said in its Property Market Report 2017.
JPPH launched the Unsold Property Enquiry System Malaysia today in an effort to address the increased overhang in the property market.
JPPH director-general Nordin Daharom said the system, which is available to everyone, allows users to search for unsold properties nationwide according to location, status and type of property.
“The search results will display the number of unsold units according to local council zones and value,” he said.
Overall, the property sector recorded 311,824 transactions worth RM139.84 billion last year, reflecting a 2.7% drop in volume and 3.8% decline in value.
Transaction volume has been on the downtrend since 2012, with only a 0.8% increase in 2014 while transaction value has been on the decline since 2014.
Residential properties contributed 62.4% of the total transactions recorded last year, followed by agriculture properties at 22.5%. The number of residential units sold fell 4.1% to 194,684 transactions but value rose 4.4% to RM68.47 billion.
By price range, demand continued to focus on units costing RM200,000 and below, which accounted for nearly 45% of the residential market volume.
In the primary residential market, property developers launched 77,570 new units, higher than the 52,713 units launched in 2016 while sales performance was moderate at 32.6% compared with 31.4% in 2016.
The property market is expected to stabilise and “will be better” this year, based on the higher number of transactions in January and February, Nordin told reporters at the launch of the report.
“The transactions have increased in the first two months of this year by 4% compared with the first two months last year, indicating market conditions have recovered compared with 2017,” he said.
Nordin said the property sector will be sustained by economic growth, accommodative monetary policy and incentives for the housing sector.