A long-term overhang?

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Just about a week ago, Napic released statistics on the performance of the property market for the first half of 2021.

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While headline numbers look good, especially in terms of growth in both volume and value on a year-on-year basis, a detailed analysis is always required to understand the underlying reason for the double-digit growth that was achieved.

Diving into residential data, the picture is slightly better as the transaction volume of 92,017 worth some RM34.51bil, was, although also lowest in five years, about 92.1% of the level achieved in H1 of 2019 and almost equivalent to RM34.66bil transacted in the same period. According to the Department of Statistics , both the mean and median Malaysian household income for last year fell by 10.3% and 11.3% to RM7,089 and RM5,209 respectively. This naturally has reduced the affordability level of Malaysians to purchase a home.

For the residential segment, the key overhang is in Johor and Kuala Lumpur as they account for 68.9% and 18.8% in terms of total overhang units and 70.8% and 20.5% in terms of the total overhang value. As seen in figure 2 , the overall overhang which includes those unsold and under construction has increased by 7.4% as at end of H1 2021 to RM108.9il or almost RM109bil in the space of just six months. In essence, the total overhang in the market in terms of the number of units increased by 8.6% to 181,460 units.Napic statistics also showed that the Malaysian House Price Index stood at 197.9 pts, down by 1.

In Kuala Lumpur, the overhang is more severe as we saw a significant jump in both the number of units and value for properties that are completed but remained unsold. Should HOC be extended, it will likely see the momentum gained from the current campaign continue into 2022. However, should the campaign end, there will likely be some sort of rush to purchase properties between now and the end of the year to enable prospective buyers to enjoy the benefits of the campaign.

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