RM22.5 Billion Worth In Unsold Houses In The Country - Malaysia Property Bubble Worst Than 1999 Crisis? - The Coverage

RM22.5 Billion Worth In Unsold Houses In The Country – Malaysia Property Bubble Worst Than 1999 Crisis?

The Housing and Local Government Ministry recorded a property overhang of RM22.5 billion worth in unsold houses nationwide, with 73 per cent of them comprising affordable houses priced at RM250,000 and below, said its minister Zuraida Kamaruddin.

She said the government had discussed the matter with the Malaysia Real Estate and Housing Developers’ Association (Rehda) and developers to organise an exposition on house ownership, as was carried out in 1998-1999, to sell the houses.

She was responding to a question from Fong Kui Lun (PH-Bukit Bintang) on measures taken by the ministry to address the problem of unsold houses due to problems of buyers obtaining financial loans from banks and financial institutions.

Zuraida said the ministry had also discussed with various quarters, including Bank Negara, to get them to help by providing home financing scheme to make it easier for the people to obtain housing loans.

Putrajaya hopes a property expo in March will help increase sales of the near RM22.5 billion in unsold property here, Housing and Local Government Minister Zuraida Kamaruddin has said.

The expo scheduled for March 1 to 3 will see 180 developers offer up 22,000 units at a discounted rate in hopes of overcoming the current property overhang in the country and reduce the gap in price to make those properties affordable to the average Malaysian.

“We hope that better discounts will be given to the people, as high as possible,” Zuraida was quoted in financial news site Bloomberg.

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“We are trying to reduce the gap starting from the expo. From then on we will try to clean up,” she added.

A combination of excess supply and domestic cooling measures have been the reasons for the slow sales in the property.

Bank Negara Malaysia had previously disclosed data showing home prices to have been “seriously unaffordable” by international standard, reportedly five times over the annual median household income in 2016.

The rate is above the global average of three times the annual median income.

The central bank estimated that RM282,000 is the maximum price that an average Malaysian household can afford, with the current actual median price of houses 11 per cent above average.

Zuraida was also quoted confirming that her ministry will consider the income levels of a particular area before approving future residential projects.

Claiming unprecedented glut, developers warn of worse year than 1999 crisis

Developers in the state urged authorities to act on the oversupply of homes in the country, saying the issue was worsening especially in the affordable housing category.

Penang Real Estate and Housing Developers Association (Rehda) chairman Datuk Toh Chin Leong said this was also why the National Home Ownership Campaign was being conducted.

Expressing concern about properties in the sub-RM300,000 category, he said measures were urgently needed to alleviate the glut.

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“In these lower priced ranges, most of the buyers could not get loans so there is an oversupply of these properties,” he said.

While saying the excess extends to other price categories as well, Toh said the problem was still not as severe.

“If we look at the middle range of between RM600,000 and RM800,000 that are in good locations, we can still sell these properties,” he said in a press conference at Rehda today.

He warned that the already softening property sector would have further deteriorated this year had the ownership campaign not been launched or measures not been introduced by the government.

Penang Rehda’s former chairman Datuk Jerry Chan went as far as saying that developers were expecting 2019 to be a worse year than 1999, when the Asian Financial Crisis had been in full swing.

“Back in 1999 it was an Asian situation, but back then, there was no severe overbuilding and the number of overhang units now is something we’ve never seen before,” he said.

However, he said the issue of overhang or unsold units was more serious in Kuala Lumpur and Johor compared to Penang.

Chan said there is genuine demand for properties as there are still buyers, but asserted that tight lending rules prevented sales from happening.

In 2013, Bank Negara Malaysia introduced guidelines that made banks evaluate borrowers on their aggregate monthly repayments instead of gauging each loan against gross income separately.

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Since then, buyers and sellers have repeatedly complained of high loan rejection rates, which BNM consistently rejects as overstated.

“It was easier for buyers to buy property in 1999 as it was easier to get loans then compared to now,” Chan said, when adding that the complaints about lack of housing were no longer a supply issue.

Questioning the efficacy of such lending rule, he purported that consumers still have access to credit cards, hire-purchase and personal loans.

He then repeated the call for the government to revisit existing lending guidelines if it was serious about helping Malaysians own homes.

When asked for data to support their claims of a severe glut in the general market and the affordable home sector, however, neither could offer exact numbers.

Toh said there was not a unified database that collected and tracked property transactions or unsold units by all developers in the country.

“Rehda is now working together with the housing ministry to come up with a more comprehensive database on the property industry,” he said.

He said there is a need for a centralised database to properly gauge the housing industry as a whole.

The government recently introduced the National Home Ownership Campaign, which will be launched in March, to sell some 30,115 completed homes nationwide.

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