Property Overhang: How Can You Capitalise On It?

The current uncertainty of the economy, acerbated by the current health pandemic, has left many people tightening their belts and also saving up for potential stormy days ahead. The property market too has been affected by this cautious approach with property prices beginning to soften in certain states along with rising property overhang in certain areas.

We already covered the complexities of property overhang (you can read it HERE) and what it can mean for buyers. But based on the latest data presented by the National Property Information Centre (NAPIC), Malaysia, there is a good chance to score a good deal on real estate.

Know Where To Look

According to NAPIC, the country registered a total of 29,698 overhang units in Q1 of 2020, amounting to a total value of RM18.91 billion. The data reveals that these units are primarily concentrated within the condominium/apartment segment, amounting to 51.4% of the total, followed by two/three storey homes at 24.9%.

In terms of where most overhang properties are currently located, Johor recorded the highest number of unsold completed properties in Malaysia with 5,468 units, which is equivalent to 18.4% of the country’s total.  Perak trails the Southern State with 4,919 unsold units with Selangor in third with 4,844. Rounding up the top five are Penang (3,043 units) and Kuala Lumpur (2,584) units.

The latest property market transaction data also revealed that of the total overhang units in Johor, 1,711 of them were apartments/condos with 2,086 landed residentials. Based on these search parameters, a quick check on Mudah.my would reveal some prospective deals that could deliver the proverbial bang for your buck for your dream home.

Search For A Good Deal

According to the Valuation and Property Services Department Malaysia (JPPH Malaysia) Q1 2020 report, a total of 10,401 units or approximately 35% of all overhang units were within the RM300,000 to RM600,000 price range.  Certainly enticing, and more importantly, very affordable for most Malaysians

Take for instance, a listing for this double storey house in Taman Delima 2 in Kluang, Johor. Initially valued at RM500,000, the property is now listed at RM50,000 less. And it is still negotiable. The majority of overhang units in the Southern state, amounting to over 90%, are also centred within the Johor Bahru district.

Using this information and conducting a simple search within this framework, Mudah Property, will reveal some enticing listings such as this new double storey house in Johor Bahru. Listed at about 20% off its bank value, the property not only comes with free legal fees, stamp duty as well MOT but also a cash back option of up to RM160,000.

Bank On Future Possibilities

In the months ahead with the loan moratorium ending, many are speculating that property prices may soften by 10-15%. For prospective buyers, this provides an opportune time to capitalise on more favourable prices within the overhang market. This is especially true in areas that will potentially become more attractive in the years ahead.

A prime example is Shah Alam, which recorded a positive demand for residential properties in the first half of this year. Thanks to attractive price points, the Selangor state capital registered an impressive demand figure of +7.63%. That figure will also undoubtedly rise as Shah Alam is set to be the epicentre of Selangor’s Golden Triangle (SGT) in the next 15 years.

Based on the Shah Alam City Council’s (MBSA) announcement, the new rezoning plan includes proposed developments and townships surrounding six key projects in Selangor. This includes the i-City SGT development, which is earmarked to expand from its 72-acre footprint to a 1,766-acre economic zone within the state.

With the continued development in this area, properties within and nearby the SGT have a good chance of future appreciation. The same formula also applies to areas with overhang properties. As long as you have the right data and a pulse on the real estate developments and trends, you may well find a suitable property in the current market to capitalise on as a future investment.