24/10/2018 Yearly demand for new homes exceeds supply - Business News | The Star Online

Yearly demand for new homes exceeds supply

CORPORATE NEWS

Wednesday, 24 Jan 2018

By Eugene Mahalingam

Property formula: Foo says about 97,500 units per year were needed based on the average household of four people.

KUALA LUMPUR: The local residential property market is facing an undersupply of housing stock –
while at the same time coping with one of its worst overhang situation in years.

CBRE|WTW managing director Foo Gee Jen said a mismatch of price, location and products has led
to this conundrum.

“Based on the population growth rate of 1.3% of 32 million people as of 2016, the annual growth is
around 390,000.

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“Based on the average household of four people, we need about 97,500 units per year.

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“But annual completions are only at 78,216 units, he said during the 11th Malaysian Property
Summit 2018 (11MPS) yesterday.

Despite the undersupply of houses, Foo, who is also Association of Valuers, Property Managers,
Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) president, observed
that there was still a serious overhang situation in the country.

“Bank Negara estimated average Malaysians can afford houses priced RM250,000 and below. But
78.7% of new launches in the rst half of 2017 were priced beyond RM250,000.”

He said almost half of the launches (49.8%) comprised units priced over RM400,000, and 25.4% of
them were above RM500,000.

“Over the past 13 years, household incomes in Malaysia have generally moved in tandem with house
prices.

“But, the main concerns are on distribution of household incomes and distribution of houses in the
market.”

This, he said, has contributed to the high level of overhang in the country.

In November last year, Bank Negara said the number of unsold residential properties was at a
decade-high, with a majority of units being in the RM250,000 and above price category – beyond the
income of most Malaysians.

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The central bank also said the oversupply of of ce space and shopping complexes in the major states
is expected to be exacerbated by incoming supply, potentially becoming more severe than during the
Asian nancial crisis.

It said supply-demand imbalances in the property market have increased since 2015, primarily on
account of the mismatch between the prices of new housing launches and what the households can
afford to pay.

Separately, Savills Malaysia Sdn Bhd deputy executive chairman Allan Soo said the medium term
outlook for the local retail property sector is expected to “remain challenging.”

“With incoming supply over the next few years, we expect to see more consolidation,” he said, adding
that the local retail property market will be at in 2018.

Soo forecasts that there will be a total of 197 malls in Malaysia by 2021, representing 86.2 million sq
ft of retail space.

There are 170 malls or 62 million sq ft of retail space as at end 2017.

Separately, Rahim & Co International Sdn Bhd research director Sulaiman Akhmady Mohd Saheh said
he is optimistic about the outlook for the industrial property sector.

“Recent factors such as growth in e-commerce particularly, has been gaining more attention as it has
been recognised as a critical enabler to accelerate revenue growth for the Malaysian economy, thus
driving demand for logistics and industrial space.”

The 11MPS is co-organised by PEPS and the Valuation and Property Services Department.

TAGS / KEYWORDS:

Corporate News , Property , Construction , Pproperty

   
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