Tuesday, March 3, 2009

Unsold, Overhang And Oversupply Of Housing in Malaysia?

CURRENT ISSUES OF HOUSING DEVELOPMENT IN MALAYSIA

Issues of Unsold, Overhang And Oversupply Of Housing


One of the main issues which is regularly being discussed and debated in the Malaysian housing industry is on the unsold, overhang and oversupply of housing development throughout the country.

The National Economic Action Council (NEAC, 1999) has identified that one of the reasons why the economy of the country suffered badly during the 1997 economic recession was due to overhang and oversupply in the property market, including in the housing property.

Official figures published by the National Property Information Centre (NAPIC) from year 2000 to 2005 (Appendix 1) clearly proved that the issue of overhang of the housing property continuously exist in the Malaysian housing property market.

A total of 51,348 housing units unsold or overhang in the year 2000 with a total worth of RM 6.6 Billion remain as an issue until 2005. The latest figure in 2005 also shows that there are 19,577 units or 20.45 % from the total 95,714 units launched, is in the category of overhang with a total worth of RM 2.63 Billion.

The overhang figure in 2005 slightly increased from 15,558 units (18.9 %) in 2004 and 9,300 units (13.3 %) in 2003 which worth RM1.34 Billion and RM1.87 Billion respectively.Further to the overhang issues highlighted, information of higher figures in total unsold housing
comprising of completed, under construction and unconstructed which are already launched for sales should also need to be considered. Data in 2005 shows that 102,430 units, represent 32.58 % from 314,441 units launched is in the unsold category. Total unsold housing in 2005 also indicates an increase compared to the previous figures in 2004 and 2003. Further to that, the data on sales performance of new launched housing units from 2001 until 2005 also indicates an issue of overhang and unsold in the housing property market.

In 2001, housing sales performance is at 53.0 %, slightly increases to 54.7 % in
2002 and steadily decreased to 52.3 % in 2003, 48.0 % in 2004 and 46.0 % in 2005.
Besides the critical figures of unsold, overhang and low performance in the new housing launch sales, data on oversupply of housing as published in the National Physical Planning (NPP) Report (2002) also highlighted the overall issues in housing development in Malaysia (Appendix 2).

The figure which only covers Peninsular Malaysia indicates that out of a total of 5,338,000 units of housing supply (including existing and committed units) in 2000, basically required only 3,941,000 units to fulfil the households housing need at that period. This figure indicates that around 1,396,000 units are actually an oversupply.

Similar problem exists in the housing need in 2005. By comparing with a total supply in 2000, its indicates a surplus of housing supply is at 755,000 units. This surplus figure will be more worrying if new committed units from the period of 2001 to 2005 be considered in that calculation.

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