Malaysia’s residential overhang improves in 3Q2022

• The majority of the total residential overhang units are those priced between RM500,000 and RM1 million at 31.6%. However, while properties priced above RM1 million only constitute 15.1% of the total overhang, the segment contributes to the highest value at RM8.65 billion or about 43%.
• Johor has the highest overhang number (5,348 units), followed by Penang (5,222 units) and Selangor (4,386 units).

KUALA LUMPUR (Feb 8): Malaysia’s overall residential overhang situation has improved in the third quarter of 2022 (3Q2022) to 29,534 units, from 34,092 units in the previous quarter, according National Property Information Centre (Napic) director Aina Edayu Ahmad.

Speaking at a press conference for PEPS Property Market Outlook for 2023, she noted that the market activity as of 3Q2022 is more positive compared to the previous year, but it has yet to return to the pre-Covid level.

"The overhang has been absorbed gradually... [But] the economic sector is important, and we are waiting to see the 4Q2022 report by Bank Negara [Malaysia]," she said.

Aina was one of the speakers at the 15th Malaysian Property Summit 2023 (15MPS) event on Wednesday (Feb 8) organised by the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector of Malaysia (PEPS). The theme of the summit is "A New Dawn".

In her session titled "Overview of the Malaysian Property Outlook", she pointed out that the 29,534 units are valued at RM19.95 billion. Condominiums and serviced apartments are the biggest contributor for the overhang number.

The majority of the total residential overhang units are those priced between RM500,000 and RM1 million at 31.6%. However, while properties priced above RM1 million only constitute 15.1% of the total overhang, the segment contributes to the highest value at RM8.65 billion or about 43%.

Johor has the highest overhang number (5,348 units), followed by Penang (5,222 units) and Selangor (4,386 units).

Another issue she revealed is the residential transaction activities in the market. She explained that similar to the residential transaction in 2012, residential transactions for 9M2022 were still dominated by properties priced RM300,000. Such a scenario poses questions on the country's effort to transform into a high-income state.

Meanwhile, in his opening remarks, PEPS president Subramaniam Arumugam proposed that the government re-introduce the Home Ownership Campaign for both the primary and secondary markets together with a reduction in real property gains tax rates.

"It will be a boost for the buyers, giving them the incentive to own properties, and sellers by allowing them to dispose of their properties. With such an initiative, the overall unsold stock is expected to clear and it will stimulate the industry to move forward," he said.

Also, he urged for a relook at the new Malaysia My Second Home policy framework, which has since affected foreigners' sentiments towards investing in Malaysia. The relook, he added, is necessary to attract quality investors into the country without compromising its ability to compete with the neighbours, in order to place Malaysia in the forefront.

Going forward, he also foresees environmental, social and governance (ESG) issues will remain a top priority on the agenda of real estate owners and investors moving forward.

"Government should continuously promote and demonstrate its commitment towards ESG values through its policies, regulations, and decision making," he said.