November 14, PUTRAJAYA – A media briefing on the Property Market Report for H1 2017 published by the Valuation and Property Services Department (JPPH) was held yesterday. The most notable trend reported was that the overhang in residential properties has worsened year-on-year, where the 20,876 units are worth RM12.26 billion. These overhang units are dominated by apartments and condominiums priced between RM500,000 and RM1 million.
According to the report, Kedah surpassed Johor in overhang numbers, with nearly 21% (4,363 units) against the latter’s 18%, followed by Selangor with 17%. Kuala Lumpur made up just 3% of the total overhang. Residential units that were unsold and under construction also increased, rising 6.5% to 68,245 units in H1 2017 from 64,077 units in H2 2016. The majority of these units too were stratified properties.
Drop in residential launches
Due to the challenging market condition, new residential launches fell 9.1% to 28,397 units in H1 2017 from 31,257 units in H1 2016. Most of the launches were in the RM400,000 to RM500,000 price range, with sales performance of 28.9%.
More homes being constructed at the moment, but new planned supply is reduced
On the construction front, more housing starts were recorded, increasing 16% to 67,662 units in H1 2017 from 58,348 units in H1 2016. Completions and new planned supply reduced to 43,132 units and 43,133 units respectively. As at end June 2017, there were 5.35 million existing residential units with nearly 0.49 million in the incoming supply and 0.42 million in the planned supply.
“The 16% increase in residential starts shows that investors are confident in the economy. “These are investors, billions involved. So if you look at property as an indicator of the economy, it is a good sign of our property industry.” –JPPH (operation) Deputy Director-General, Dr Zailan Mohd Isa-
Will the new supply of homes be absorbed?
On whether the market will be able to absorb the new supply of homes, National Property Information Centre (NAPIC) Director, Khuzaimah Abdullah said the impact is yet to be seen.
“I am sure the developers are very prudent people. If there are no takers, no buyers, I’m sure they would hold off construction because once you are into the construction stage, there’s no turning back. If you have not started then you can hold on,” she said.
Office & Retail Sectors
In the office and retail sectors, the occupancy rate was above 80% but unoccupied space remained high, with 3.4 million square metres of unoccupied private office space.
Kuala Lumpur recorded the highest unoccupied space with more than 1.62 million square metres, followed by Selangor with 0.87 million square metres.
The retail sector recorded more than 2.79 million square metres of unoccupied space, reflecting an increase of 2.6% from the preceding half. Selangor and Penang Island recorded higher unoccupied space of more than 0.5 million sq metres.
“I must emphasise that both issues – residential overhang and commercial space vacancy are pertinent issues that must be addressed by all parties, particularly local authorities and property developers. Both must exercise due diligence before arriving at development decisions to avoid oversupply.” -Deputy Finance Minister II Datuk Lee Chee Leong-
Overall, the property market continued to soften in H1 2017, recording 153,729 transactions, a decline of 6% from 163,527 transactions recorded a year ago. However, the overall value of transactions rose 5% to RM67.82 billion from RM64.60 billion a year ago.
Datuk Lee said the property market is expected to remain soft in the next couple of years but will be supported by various property-related incentives and accommodative monetary policy.
– THE SUN-