My Fren Charles tan from kopiandproperty wrote this article on the latest property market report.
kopiandproperty.com attended the Malaysia Property Market Report launching ceremony today in INSPEN. Following are the updates for Malaysia’s property market for the full year of 2018. (My comments are in bracket and italic) Briefly, it’s NOT negative. In fact, for 2018, the property market recorded a total of 313,710 transactions worth RM140.33 billion. This is an increase of 0.6% by volume and 0.3% by value when compared to 2017. (Notice the volume is up MORE than the value? Yea, it’s definitely a buyers’ market currently. Please also note that the difference is still very little even when any Malaysian knows that the property market is slow)
Moving on, the report by JPPH says the residential property continued to support the overall property sector with 63% of market share followed by agriculture property by 21.5% share. For residential properties, there were 197,385 transactions worth RM68.75 billion in 2018. This is 1.4% increase in volume and 0.4% in value. (Again, this sums up the market currently where the seller have lesser negotiating power) Performance of major states are as follows: Kuala Lumpur (up 6.8%), Johor (up 7.8%), Penang (up 6.8%) while Selangor had a very marginal decline of 0.4%. (Everyone, total transactions are still close to 200,000 per year. This is not a sign of a weak market. In fact, this number is holding up despite all the negativities in the market. Imagine what will happen if the sentiment turns positive)
New launches are down by double digits. It has contracted by 14.9% to 66,060 units compared to 77,570 units in 2017. (Newer launches will now be more suitable for the market but at the same time, the older units may still be in the unsold statistics and will need more efforts. That’s the reason for the current Home Ownership Campaign (HOC). Kuala Lumpur’s new launches dropped by 56.1% while Selangor decreased by 10%. Johor meanwhile recorded an increase of 17.3% when compared to 2017. 36.8% of these launches are condo and apartments while two to three storey terrace houses are 29%.
Overhang situation has worsened. From 24,738 units worth RM15.64 billion in 2017, it is now 32,313 units valued at RM19.86 billion. In percentage terms, this is 30.6% for volume and 27% for value. (Again, the same situation continue to show that the property prices are cooled already. In fact, more developers are now pushing into the affordable category instead) 43.4% of all the overhang is due to condominiums and apartments. Meanwhile, my home state, Perak has the highest overhang unit by percentage, at 20.7%. Kuala Lumpur is next with 19.2% overhang units.
Home Prices Malaysian House Price Index (MHPI)
(These are based on TRANSACTIONS yeah. These are not based on the prices we see in property listing sites). MHPI increase by 3.1%. Johor and Selangor both saw the house prices rising by 5.6% and 3.3% respectively. By type, the terrace house price index recorded the highest increase. (Not hard to understand why the terrace house price has the highest increase. These are landed and the supply is not as many as the high-rise. Thus, the pressure on owners of these units are weaker and they could maintain or sell higher than the price they bought previously too)
Commercial sub-sector recorded a significant increase in market activity. It increase 8% in terms of volume and 16% in terms of value. (22,162 transactions in 2017 vs 23,936 transactions in 2018 valued at RM25.44 billion in 2017 and RM29.51 billion in 2018).
Shop sub-sector dominated the transactions at over half; 54% versus 36.4% of the total value. This is a 5.1% increase in volume and 11.5% in value when compared to 2017.
Shop overhang recorded an increase of 11.2% to 5,055 units valued at RM4.08 billion. Unsold under construction recorded similar upward trend to 7,233 units compared to 5,889 units in 2017.
Shopping complex remains stable. Average occupancy rate is at 79.3% versus 81.3%in 2018. Decline was due to negative take up rates in Selangor and Pahang. (It’s important to note that all these are average numbers. Many popular malls record far higher numbers than this number. It’s also important to note that with more new malls coming into the market, if situation remains the same, the number for occupancy should go down further)
Purpose Built Office. Occupancy performance showed a marginal decrease to 82.4% versus 83.3% in 2017. (VERY marginal yeah). Kuala Lumpur (where MOST offices are built anyway) recorded highest negative take up rate of -38,632 sqm. This is 7,127,482 sqm in 2017 versus 7,088,850 sqm. All other thirteen states recorded more than 80% occupancy rate with Perlis with 100% occupancy. (I have visited MANY old office buildings where the car park is leaking water, where I am worried if my wife is to park there and walk alone and where I start imagining some horror movie I watched not too long ago. These MUST go or at least we should have more data about these versus the proper offices.)
Stable property market for 2019 judging from the increase in volume and value of total transactions in 2019. (Plus, supported by the HOC 2019 too) Property overhand issue needs to be thoroughly handed and a holistic measure be put in place. Overhang does not necessarily mean oversupplied. (I have repeated this in every talk I do this year. Guys, that BAD property which is overpriced and is in a bad location will definitely be in UNSOLD but it is not oversupply. Oversupply is when products at the right price and right location is still unsold…) Last but not least JPPH said that contributing factors to the overhang include mismatch, affordability and cost of living. The solution is to find the right location, right price and right type of property so that demand will pick it up.