Unsold stock still of concern
NST-PROP 19/6/2004 By Nicholas Mun

Unsold residential stock is something developers should continue to take seriously, notwithstanding the fact that property overhang has since been redefined.

Ravindra Dass Property Services Sdn Bhd managing director Ravindra Dass said there are about 71,000 unsold residential units in the country, which as a result of the redefinition, are no longer categorised as being in the overhang position.

“Developers should still be cautious and hope the economic growth will mop up some of these units,” Dass said during his presentation last week entitled The Malaysian Property Market 2003 - 2004: Analysis of Prospects and Problems.

The National Property Information Centre (Napic), a unit of the Ministry of Finance’s Valuation and Property Services Department (VPSD), had redefined overhang stock by confining it to completed units issued with Certificates of Fitness for Occupation but still not sold for nine months since launch on or after Jan 1, 1997.

This new definition employed in Napic’s Property Market Status Report 2003 released at the end of April resulted in only 9,300 units being classified as in overhang. Prior to 2003, Napic’s definition was stock that remained unsold nine months after being launched on or after Jan 1, 1997.

Based on this, overhang stood at 40,977 units in 2001 and 59,750 units in 2002. According to Dass, if this definition had been maintained, the nation’s overhang would have been 80,454 units in 2003 (see table).

He cautioned that the 52.3 per cent take-up in 2003 may bring about a potential surplus in the light of the 71,154 unsold units on top of the 9,300 overhang units.

On the whole, however, Dass feels that the overall outlook for the residential sector this year is promising.

“It is expected to perform better, especially with the Gross Domestic Product growth the country is seeing.”
However, he said, the market “is unlikely to gallop”.
“Those days are gone. What we want is steady growth,” he said.

On the build-then-sell method of housing delivery, the former director-general of the VPSD said: “This is good for buyers as they will be able to inspect the units before buying, but it cannot be implemented overnight.”

Dass suggested that the industry be given time to move towards this system of delivery, much like how local financial institutions were given a timeframe to merge. He also said proper studies need to be carried out by all relevant sectors before it can be implemented.