Residential overhang in 2017 highest ever recorded, says MoF division

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KAJANG (April 17): The Valuation and Property Services Department (JPPH) of the Ministry of Finance Malaysia said the residential overhang was at its highest point to date in 2017, amid a 67.2% increase in the number of unsold completed units.

The department said the residential overhang grew 67.2% to 24,738 units, while value jumped 82.8% to RM15.64 billion in 2017.

"The growing concern on overhang received wide coverage in recent months, which led to the issuance of the future development freeze on luxury properties worth more than RM1 million in major cities.

"These overhang numbers which only accounted for those in the residential sector (excluding apartments, SOHO, etc) were the highest to be ever recorded," said the department.

On the other hand, the number of unsold units under construction fell 3.4% to 61,882 units in 2017, led by Johor and Selangor, each accounting for 18.2% and 18% respectively of total units nationwide.

Meanwhile, the overall Malaysian property sector saw a fall in both the number and the value of property transactions in 2017, according to the Property Market Report 2017.

Year-on-year, the number of transactions fell 2.7% to 311,824 while total value of transactions declined 3.8% to RM139.84 billion.

Residential property continued to be the driver of the local market, accounting for 62.4% of the market as at end-2017.

In terms of transactions, the residential segment saw a 4.1% decline in the number of transactions, while value of transactions increased 4.4% to RM68.47 billion.

JPPH said demand was largely focused on properties priced RM200,000 and below, which accounted for about 45% of residential market volume.

It said property developers' sentiment on the market is seen to be improving, as new launches increased to 77,570 units from 52,713 units in 2016, while sales performance was moderate at 32.6%.

By state, Kuala Lumpur saw the most launches with 22,000 units, albeit with low sales performance of 19.5%, followed by Selangor (13,522 units with 45% sales performance) and Johor (7,926 units with 44% sales performance).

A majority of these launches comprise two- to three-storey terraces priced between RM500,000 and RM1 million.

House prices continued to see steady increase, with the Malaysian House Price Index up 6.5% year-on-year to 187.4 points, led by Selangor and Kuala Lumpur which saw prices growing 7.6% and 7.3% respectively.