Is HOC extension the answer to M’sia’s property overhang woes?

HOUSING and Local Government minister Datuk Zuraida Kamaruddin recently announced that the Government is looking to extend the Home Ownership Programme (HOC) until the end of 2021, pending approval from the Ministry of Finance (MOF).

However, Zuraida also mentioned that the MOF will probably review the conditions, and they will be slightly different from the existing ones.

While this is a good move that will help improve property developers’ sales, this may not necessarily translate into a massive boost for an industry that is facing soft market conditions and a serious overhang problem.

Bank Negara Malaysia, in its Financial Stability Review for Second Half 2020 report, warns that unsold properties in the country have remained at elevated levels as at end-2020. These are mainly the serviced apartments, small office home office (SoHo) units, and houses priced above RM500,000 in less popular locations.

Property experts, too, expect that the number of overhang properties is expected to remain high in 2021 based on income level, locations and prices.

According to consultant firm Rahim & Co International Sdn Bhd, for example, the market is set to undergo another challenging year. Its research director Sulaiman Saheh revealed that there were 57,390 units of unsold completed homes involving residential properties, serviced apartments and SoHo units worth RM42.49 bil.

Sulaiman added that three states, namely Johor, Selangor and Kuala Lumpur, still have the highest number of unsold completed residential units in Malaysia, with 33,000 units, 8,700 units and 7,800 units respectively.

The bottom line is, precarious economic conditions as a result of the COVID-19 pandemic, coupled with pre-existing issues such as unaffordability, oversupply and rising costs of living has made many potential homebuyers think twice about purchasing a property.

While the extension of the HOC campaign and the myriad incentives it offers is a good step forward that will undoubtedly give the property industry a much-needed boost, the Government should also look into resolving the pre-existing problems, especially when it comes to unaffordability, over-supply and increasing cost of living.

These are the problems that need to be resolved and tackled effectively to ensure long-term sustainability of the country’s property market, and until these problems are resolved, the property overhang problem is just going to, well, hang over us like a dark cloud. – April 11, 2021

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