This article first appeared in The Edge Financial Daily on April 5, 2018

PETALING JAYA: Despite an oversupply of shopping complexes and office spaces, it is not the case with residential properties as Malaysia is still short of 3.2 million homes, said the Real Estate and Housing Developers’ Association Malaysia (Rehda).

“We concur with Bank Negara Malaysia that we are also concerned about the number of commercial, office and retail spaces coming onto the market, because the incoming numbers definitely outstrip the demand,” Rehda president Datuk Seri FD Iskandar Mohamed Mansor told reporters at a media briefing yesterday on a survey entitled “Property Industry Survey 2H2017 & Market Outlook 2018” for Peninsular Malaysia’s property market.

“We are concerned about the situation of unsold units in the country. But if you look at the household figures, we are really short of homes, especially affordable homes,” he said.

He said Malaysia’s population is expected to increase almost 2.8% from 32.1 million to about 32.99 million by end-2018, while the National Property Information Centre's (Napic) latest data show there are only 5.1 million homes on the market.

“Today’s household size is shrinking to four people per household from 5.2 people five years ago and over six people 10 years ago. If you take the 33 million population and divide by four people per household, you will get about 8.3 million homes. But now, we only have 5.1 million homes, according to Napic’s data, so we are still short of 3.2 million homes.”

He added that housing demand is poised to grow as the market sentiment, global and domestic economies, and the ringgit are expected to improve going forward. “So, do we have enough homes for all households in Malaysia?”

According to the survey, 34% of the 200 respondents launched new projects in the second half of 2017 (2H17), totalling 15,082 units, of which 45% were sold within six months after their official launches.

Properties from RM500,001 to RM1 million represented 45% of all unsold units, defined as properties not sold over the past three years. Most of these units were in Johor Baru, Iskandar Puteri, Shah Alam, Seremban and Ipoh.

End-financing remains the main hurdle, with 82% of respondents citing it as the biggest cause of unsold units. Moreover, 45% of loans rejected were for properties at RM500,000 and below. Other factors include low demand and interest, as well as unreleased bumiputera units.

FD Iskandar urges banks to review the financing of homes and provide higher financing margins of at least 90% to 95% to homebuyers, as the upfront cost of buying a house is a heavy burden for them.

“We fully agree that Bank Negara is the custodian of financial market stability of the country, but if we take away the office and retail units, the financing for residential houses below RM500,000 must be addressed. Big data must also be available as we need to know where, when and which product to build,” he said, adding that fellow developers should conduct proper research before they build.

Rehda’s survey shows of the 200 respondents involved, 110 or 55% of them planned to launch a total of 27,853 new properties in 1H18, a significant increase of 206.45% and 84.68% compared with the 9,089 units and 15,082 units launched in 1H17 and 2H17 respectively. However, 92 respondents who planned to roll out new projects expect their sales to be 50% and below.

Meanwhile, about half of all the respondents held a “neutral” outlook for the economy, business environment and property industry this year.