About the unsold units? We still need more units, actually.

Do we worry about the ‘extremely high’ unsold units yet? We should worry if all these unsold units are very cheap and in awesome locations and yet nobody wants to buy because they could not afford. Maybe it is because the job market is bad. No one could afford because they do not have a job. However, if all these unsold units are VERY EXPENSIVE, then quickly look at the whole market. If the whole market is full of only super expensive properties, a property bubble crisis is looking. It will burst soon. So, what are the other signs for a property bubble to burst? 
Anyway, should we be worried about these unsold units? Well, I think it depends on who we represent. For the authorities, this is worrying because it may signify some weaknesses with the market demand vs supply. For the developers with these unsold units, they would need a lot more strategies to sell the units sooner rather than later. Every quarter new projects are launched which meant competition gets tougher. For the buyers, actually nothing has happened, yet.  Just view and buy objectively and everything will be just fine.
Full article in Edgeprop here. According to Real Estate and Housing Developers’ Association Malaysia (REHDA), in terms of residential properties, Malaysia is still short of 3.2 million homes. REHDA President Datuk Seri FD Iskandar Mohamed Mansor said, “We concur with Bank Negara that we are also concerned over the number of commercial, office and retail spaces that are coming to the market, because the incoming numbers definitely outstrip the demand.”  (This meant he agree that commercial properties have issues because the incoming supply is far higher than the demand for them. Market needs time to absorb them all)  He shared why he said Malaysia needs more residential properties. Malaysia’s population is expected to increase by almost 2.8% from 32.1 million to about 32.99 million by end-2018. However, latest data from the National Property Information Centre (Napic) showed that there are only 5.1 million homes in the market.
He added, “Today’s household size is shrinking to four people per household from 5.2 people five years ago and six over 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.”  As for the unsold units, 45 percent were priced from RM500,001 – RM1 million. (Hopefully everyone can understand now why there are so many unsold units. The price is just too high for many to get their loans approved based on their current income! Perhaps we need to wait a bit?)  were not sold over the past three years.  FD Iskandar also urged banks to provide higher financing margins of at least 90 – 95 percent to homebuyers because these homebuyers just could not come up with the upfront cost. That full article again for your reference. 
Conclusion? Residential homes are still needed based on the population growth in Malaysia. Huge shortage in fact. Commercial properties may not be that easy nut to crack currently, buy very carefully. Please SAVE the downpayment and not buy every time there’s something we like! Remember, when the majority are not saving, we will be heads and shoulders above the rest when we have enough to buy a property. Frankly, I disagree that banks should lower their lending standards but I agree that sometimes they should also be more pro-active instead of relying on just some statistics to decide whether to approve or not. Happy following yeah.
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written on 21 April 2018
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