As a Malaysian who has just started working a full time job, we all know that property prices in Malaysia are surging at a rapid pace as each year goes by. With the median home price of RM486,474 and RM836,420 for Selangor and Kuala Lumpur respectively, being financially capable enough to be able to actually own a house is definitely one of the many goals for Malaysians.
The increase in property prices is also due to the increased number of developers rushing to build properties on every piece of land that is within their grasp. With property prices increasing drastically in the recent years, it is not a surprise that Malaysia’s property market is experiencing a property overhang. The total national property overhang is valued at approximately RM 28 billion as of 2018. The unsold units are anywhere from RM 50,000 or less to more than RM 1 mil. The number of unsold units are highest with more than 12,000 units for property valued at RM 500,000 and above.
It is not properties that are oversupplied, it is expensive properties that are oversupplied and that the affordable range of properties is not even close to meeting the demand of the home buyers. The poor purchasing power of Malaysians is also another reason that contributed to the property overhang situation today. As all Malaysians will know, the economic situation of Malaysians are in right now have immensely reduced the activities going on in the market and also the people’s disposable income.
Many of the big developers have now started to shrink the size of each unit so that they can decrease the price as well to make it seem more affordable for home buyers but these units are still developed in urban centers and on commercial land which has a way higher value compared to residential land. A property with a lower price tag definitely attracts first time home buyers since they are usually younger in age and have minimal experience and knowledge about real estate, they tend to fall for this hoax. Thus, many first-time home buyers will fall for it and think that it’s worth it to sacrifice a little space for a lower price.
Home owners are usually shocked after they receive the high serviced charges, utility bills and other taxes because of the commercial status of their home, which is why it is important and highly encouraged for everyone to stay far away from serviced apartments if you are not willing to fork out your hard earned cash to pay those marked up bills.
On the other hand, there is also a crowdfunding platform for properties which is said to help first-time home buyers make their purchase since many of them will be facing difficulties when they try to apply for bank loans. The buyer will be able to purchase a property from a given property list by paying 20% of the property price. Potential investors will then cover the remaining 80% of the price of the selected property in return for probable inflation of the property’s value over a specific amount of time. Of course, this is up to the home buyers whether they want to rely on this scheme to make their first home purchase but it is highly encouraged that they do thorough research about this scheme and how it works before signing any papers.
Would you consider purchasing a property that has been overhung for years, if it were to be spruced up?
Written by Hann Zern