WHILE many international realtors praise the Malaysian property market’s stability amid a backdrop of a cooling regional economy, experts at home have pointed to a worrying glut in unsold homes.
The National Property Information Centre (Napic) recently published data showing a total of RM19.54 billion (US$4.6 billion) worth of unsold properties to date.
The centre said by the third quarter of the year, the nation saw an increase in 30,115 units that were unsold, compared to the 20,304 units in the same period last year.
Chang Kim Loong, secretary-general of the National House Buyers Association (HBA), said the number of unsold properties would continue to rise if homes were sold at prices that people could not afford.
Currently, “affordable” homes are widely considered to be properties that cost RM500,000 (US$120,192) and below and Chang says the developers should revisit the definition and consider the actual affordability of the regular Malaysian.
Business publication The Edge Markets recently revealed that half of Malaysian workers still earned less than RM2,000 (US$480) a month despite substantial income growth since 2010.
“The situation of unsold properties or ‘overhang’ is only going to get worse if those in the Real Estate and Housing Developers’ Association (Rehda) and other developers continue to build properties which are beyond the income levels of the majority of our people,” Chang said, as quoted by Free Malaysia Today.
Chang said the association has repeatedly warned of the mismatch between house prices versus the income of consumers.
“It’s just not affordable,” he said.
The affordable homes, according to Chang, would ideally cost between RM150,000 (US$36,000) and RM300,000 (US$72,115).
Chang suggested that the economic slowdown was unlikely to pick up again in the near term, but housing developers could give “real” discounts to sell the unsold properties.
“Instead of giving freebies like free legal fees, free stamp duties, free furniture, free two years’ maintenance charges, extra car park, or cash back guarantees, housing developers should give actual discounts off the sales price.
“As an example, actual sales price minus 20 percent off. They must also build the right product at the right place with the right pricing and the right numbers.”
Another property expert Ernest Cheong agreed with the argument, adding the number of unsold units would only rise if prices kept increasing.
For Cheong, the lack of transactions could mean that 50 percent of the developers faced bankruptcy in two years’ time if they failed to sell the units and service their loans with the banks.
The situation could be a repeat of the recession in the late nineties in which a large number of developers went bankrupt for this reason.
Cheong pointed the blame solely at the developers who went ahead to build more upmarket properties instead of affordable ones, despite warnings several years back of an oversupply of expensive homes that ordinary people could not afford.