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The property sector’s recovery path remained uneven in 2021, albeit some green shots towards the fourth quarter with a marginal rebound in sales, but the issue of overhang and unsold units remained elevated coupled with the rising cost of living that would put property purchase plans on the back-burner.

According to the Real Estate & Housing Developers’ Association (REHDA), the property sector was not spared from the spiralling effect of various movement curbs to stem the spread of Covid-19 in the country.

“As the industry was about to gain momentum, the Full Movement Control Order (FMCO) that took effect on June 1, 2021, and lasted for more than three months worsened the situation.”

“Many business operations including construction activities as well as sales galleries had to once again halt their operations, thus impeding growth for the sector and its players,” it said.

The current low Overnight Policy Rate (OPR) of 1.75 per cent since July 7, 2020, and the Home Ownership Campaign (HOC) till year-end have helped shore up residential property sales, easing the overhang in the segment in the third quarter.

However, the developers’ association said that despite business picking up since the FMCO ended in October, the overall market sentiment remained subdued while optimism remains on the horizon.

Unsold

According to the National Property Information Centre (NAPIC), a total of 30,290 units of completed houses with a value of RM19.75 billion were reported unsold in the third quarter (Q3) of 2021 and by state, Johor has the highest number of unsold units (24 per cent share) in Malaysia, followed by Kuala Lumpur (20 per cent) and Selangor (18 per cent).

By property type, over two-thirds (73 per cent) of total unsold units are high-rise properties such as apartments, condominiums and serviced apartments.

NAPIC also pointed out that based on its collective data, over 70 per cent of the unsold properties in the country were above RM300,000 which is the normal benchmark for affordable housing, which is pointing to an overhang.

This has led Bank Negara Malaysia (BNM) to warn that unsold properties in the country will remain elevated.

This mainly includes the serviced apartments, small office home office (SOHO) units, and houses priced above RM500,000 in less popular locations.

Catering for those in need

On the other end, the government under the 12th Malaysia Plan (12MP), has announced that 500,000 homes for the middle and low-income group will be built to cater to the group in need of a home.

Under Budget 2022, the government had also announced that it will continue housing projects specifically for low-income groups, with an allocation of RM1.5 billion.

This particular move in Budget 2022 will indirectly help ease the burden of potential house buyers, especially those who belong in the Bottom 40 per cent (B40) category.

During Budget 2022, the government also allocated RM500 million to build up to 14,000 homes under Program Perumahan Rakyat and RM315 million to build 3,000 units of Rumah Mesra Rakyat.

It will also no longer impose Real Property Gains Tax (RPGT) from the disposal of real property by residents, permanent residents, and other companies starting from the sixth year onwards.

In assisting those without proof of fixed income such as gig workers, small business owners, and farmers, an allocation of RM2 billion under the Housing Credit Guarantee Scheme was placed under Budget 2022.

Besides, various agencies were also looking into implementing a Rent-to-Own scheme as part of reducing the overhang and providing potential home buyers ample time to obtain their dream home.

Tough outlook for our pockets

While jobs are starting to pick up, leading to an expected increase in salary next year, a majority of Malaysians are still facing tough times in the after-effects of the pandemic.

Lest we forget at the onset of the pandemic last year, some homeowners had to offload their homes and downsize amid narrowed net income, leading to subdued demand in both new and sublet property this year.

As the pandemic continues to delay the opening of borders, especially with the emergence of new variants such as Omicron, those in the airline and services industry remain on the doldrum.

Some of those who work for a local airline is still under a 30 per cent pay cut, some in the hotel industry has yet to be fully reinstated and those in the Meetings, incentives, conferences and exhibitions arena are still facing a bleak future.

“With the rise in living cost, no increment and still under a pay cut, I have cancelled my booking to buy my own home for now simply because I could not afford it,” said Shahril Azman Razali, 33, who works with a local airline.

Headlines have also pointed out that food prices have seen a drastic increase and it is expected to continue rising until Q1 of 2022.

Hence, with less to no savings left and a decrease in the Employees Provident Fund (EPF) amount, the increase in prices of goods is not helping to make things easier for the general population especially the middle-income group living in big cities.

The desire to own a home remains far fetched, at least in the near future.

Source: NewStraitsTimes, Bernama/December 13, 2021

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