Residential property overhang units remain on the high side in 1Q22

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 Residential overhang units in 1Q22 were largely contributed by condominium and apartment. Condominium and apartment contributed 20,680 units or 58 per cent to total residential overhang units, analysts observed. — Bernama photo

 

KUCHING: Malaysia’s residential property overhang units remain on the high side in the first quarter of 2022 (1Q22) as there is still the issue of oversupply in property market, analysts observed.

According to the National Property Information Centre (NAPIC), residential overhang units increased to 35,592 units in 1Q22 from 27,468 units in 1Q21. The increase in overhang units could be attributed to the disruption to economic activity from several lockdowns in Malaysia.

The increase in residential overhang units also implies lingering concern of oversupply in the property market.

“Nevertheless, the situation showed sign of easing on sequential basis as it eased marginally to 35,592 units in 1Q22 from 36,863 units in 4Q21.

“This was following the reopening of economic activity as Malaysia is transitioning to endemic phase.

“In a nutshell, we see that issue of oversupply in property market remains as residential overhang units remain high in 1Q22, staying above 30,000 units,” the research team at MIDF Amanaha Investment Bank Bhd (MIDF Research) said.

Across all states, Johor holds the highest count of unsold completed units at 5,992 units, followed by Penang (5,816 units) and Selangor (5,215 units). Johor remained in the top three of the lists for the past few years mainly due to the excessive building of residential properties which outpaced demand for properties in Johor.

The residential overhang in Johor also increased to 5,992 units in 1Q22 from 5,468 in 1Q20.

MIDF Research opined that there could growing concern on property oversupply in Penang as overhang units in Penang ballooned to 5,816 in 1Q22 from overhang units of 3,043 in 1Q20.

Meanwhile, Sarawak holds the ninth highest unsold completed units, with a overhang of approximately 2,000 units.

“Residential overhang units in 1Q22 were largely contributed by condominium and apartment. Condominium and apartment contributed 20,680 units or 58 per cent to total residential overhang units. Meanwhile, two to three storey terrace contributed 5,889 units or 17 per cent to total residential overhang units followed by 2-3 storey semi-detach (5 per cent). In term of price range of overhang units, properties priced between RM300,001 to RM400,000 contributed highest number of overhang units of 5,565 followed by properties priced between RM200,001 to RM300,000 with total overhang units of 5,245.

“In a nutshell, we opine that oversupply situation is more apparent for properties priced within affordable price range of below RM500,000 as it contributed to 58 per cent of total overhang units.

“Meanwhile, properties priced within RM500k-RM1m contributed to 29 per cent of overhang units while properties priced above RM1 million constitutes 13 per cent of overhang units,” MIDF Research said.

All in, the research team said: “We see near-term outlook for property sector to remain unexciting due to the oversupply concern. Residential overhang units remain on the high side in 1Q22, which we think would make property market remains competitive and prompt property developers to offer attractive package to attract buyers.

“That may also make property developers unable to fully pass on the rising cost of construction to property buyers and bring margin compression of property developers.”