BY NG PAU LING pauline@thestar.com.my
The issue of supply-demand imbalance in the property market has been highlighted since 2015, and the number of overhang and unsold residential properties in the nation have worsened every year. What do the “unsold” and “overhang” numbers mean in the residential property market?
In the first quarter of 2018 (1Q 2018), the unsold residential units stood at 100,459 units, increasing from 99,246 as of 2017, according to the Napic Stock and Status Residential Q1 2018 report.
The numbers include unsold residential properties that have been completed (overhang), under-construction and officially launched but yet to be constructed in the market.
What does the “residential overhang” means?
Residential units which remained unsold nine months after receiving the Certificate of Completion and Compliance (CCC) and Temporary Certificate of Fitness for Occupation (CFO) are put into the overhang basket, as defined by NAPIC.
In other words, these are residential properties which were completed and ready-to-use but remained unsold after nine months.
What defines an unsold residential property?
Unsold residential properties can be divided into two categories based on the stage of construction.
Residential units with building plan approval that has yet to begin construction, but remained unsold nine months after the official launch are defined as unsold not constructed property.
Once the developer begins to construct the house, the units under construction will be moved to the unsold under-construction property category if it remains unsold more than nine months.
Reasons that cause the overhang of residential properties
High-rise developments and properties priced below RM300,000 are the property segments with the highest unsold rate.
In Bank Negara’s box article titled “Imbalances in the property market,” the factors that hamper the take-up rate of these properties include unattractive location and low connectivity. Moreover, non-creditworthy loan applicants and the public preference toward landed properties over the high-rise housing products also lead to the increase of unsold numbers in these housing segments.
Platform to check for the unsold property units
In April 2018, Napic launched the Unsold Property Enquiry System Market (UPESM), a data search platform for the public to search for the number of unsold property units. The search category can be defined by year, state, district, construction stage and housing types.
Napic will monitor and update the data from time to time, based on the feedback from developers or project owners.
“We hope to build closer relationships with property developers on the information sharing. This is crucial in achieving the goal of providing transparent information to the market, such as developers, local authorities and homebuyers for a better decision,” said Napic deputy director of property inventory division Khalid Abdul Mutalib during the Rehda’s Housing in an Era of Change: A New Direction conference.
Read More: Spike in property launches priced at RM500,000 and below
