This article first appeared in The Edge Financial Daily on September 27, 2019

PETALING JAYA: The issue of property overhang continues unabated in the first half of 2019 (1H19), with a 16% rise in the number of unsold units to 5,875, compared to 5,054 units in 2H18, according to the findings of a survey among members of the Real Estate and Housing Developers’ Association (Rehda).

The survey also shows an increase in the number of respondents with unsold units, which was at 73%, versus 62% in 2H18.

The half yearly survey — the Rehda Property Industry Survey — sought to gauge property developers’ performance for 1H19 and gather their views on the real estate market’s outlook for 2H19 and 1H20.

“Of these unsold units, 34% of these were in the semi-detached or bungalow category, with terrace houses at 28%, and apartments at 24%,” Rehda president Datuk Soam Heng Choon told reporters during a briefing following the release of the survey’s findings yesterday.

These unsold units are mostly priced between RM250,000 and RM1 million each.

Soam also said most of the respondents — 88% of them — reported having problems with end-financing, which was also the top reason cited for the issue of unsold units, followed by unreleased Bumiputera units and low demand or interest.

“The top three reasons for end-financing loan rejection include the applicant’s ineligibility due to income, or that they were offered a lower margin of financing [than requested], or possibly because of their adverse credit history,” Soam said.

And increasingly more developers are affected by the economic scenario — 93% of those surveyed — compared with 87% in 2H18, while 35% of respondents said the overall cost of doing business have increased by 9%.

As a result of unsold units and a subdued economic environment, developers have also slowed down on launches, with 10,574 units launched in 1H19, down 12% from 2H18’s 11,964 units.

Sales performance, however, spiked 15% in 1H19, helped by respondents’ aggressive participation in online and social media marketing, the provision of assistance to buyers in resolving the issue of down payment, and the promotion of units within the affordable price range.

Looking ahead, most property developers (65%) remain neutral on the property market performance for the rest of the year.

But they are more enthusiastic about prospects in 2020, on the back of expected higher consumer purchasing power and an improvement in the domestic economy.