PROPERTY ROUND-UP FOR 2004/2005
by Lim Lay Ying
Property Times, New Straits Times
25th December 2004

See also, Museums: A Catalyst for Growth and The Overhang Situation in the Property Market

Six months into 2004 : the country’s economy was steadily gaining momentum and registering impressive growth rates at 7.6 per cent in the first quarter and 8.0 per cent in the subsequent quarter. The upswing in global electronics demand as well as favourable commodity prices continued to support the rise into the third quarter with a 6.8 per cent growth.

The robust economic performance carried over from the previous year however did not seem to have filtered significantly into the real estate market to help reduce the overhang stock of residential and commercial properties especially.

The Valuation and Property Services Department of the Ministry of Finance reported an increase in the number of overhang units, for homes and shops over the 2003 figures. These include units that had been physically completed and had been launched for sale but remained unsold for more than nine months.

In the Q2 2004 Property Market Status Report released recently, the number of residential units falling under this definition stood at 11,199 – an increase of 20.4 per cent over the Q4 2003 figure of 9,300 units. Unsold completed shops jumped 45.1% to 2,941 units in Q2 2004 from 2,027 units last year.

And despite interest rates remaining stable at low levels because of ample liquidity in the banking system, the sales performance of new project launches deteriorated. In the first half of this year, only 41.8 per cent of the total 36,564 housing units that were launched were reported sold. Last year, the average sales performance was higher at 52.3 per cent of the 83,214 new houses launched.

A sector-by-sector round-up of the country’s property overhang situation in the 2004 real estate market presented in the following section, reveals several trends which prevail in the industry. Read on to discover which location/state is performing up-to-par, which property types are still over stocked, and which price categories dominate.

One obvious phenomenon is the performance gap between quality and average property which is widening. Generally, those with the scarcity factor always do well while some perform only when the market is running hot. Those in prime locations have become too expensive, and buyers are demanding more affordable suburbs – which is a healthy pattern as this will provide long-term growth. This “ripple-out” effect is a clear trend in the residential market.

Given the overall strength of the economy and with interest rate rises in the immediate term as a non-issue, turnover and value levels can be expected to be sustainable for a while.