Speaking to FMT today, its research director, Sulaiman Akhmady Mohd Saheh, said in 2019, the property market continued its recovery with a 6.4% increase in the number of homes sold from the year before.

“Most of these were in the middle-level category, between RM200,000 and RM600,000,” he said after Rahim & Co’s Property Market Review 2019/2020.

These homes, he said, were in demand by buyers seeking to live in them.

As for the overhang in units, Sulaiman said some 18% of them were in the RM1 million and above category and 28% were in the RM200,000-RM400,00 category.

Overall, he said, properties remained unaffordable to most as wages were not keeping up with prices.

As for the overhang in the lower-range category, Sulaiman attributed this to factors such as the undesirable location, the property type and insufficient demand.

“Sometimes, the issue is that the homes are located too far away from where people are working. They may want a landed property but the units available may be only low-rise apartments.”

In terms of office space, Sulaiman said there were 32 million square feet of unoccupied space in the Klang Valley, minus those available in Putrajaya.

To put it into perspective, the tallest building in the country, the Exchange 106, has 2.6 million square feet in lettable space.

As for retail areas, he said malls located in prime locations still enjoyed good occupancy rates due to the market but there were also some which were not doing so well and had high tenant turnover rates.

“For the coming year, we expect the property market to recover at a moderate rate.”

He said it will take a few years more for the market to fully recover due to the challenging global economy, hampered by the US-China trade war and Middle East tensions, among others.

“But it’s not as gloomy as before. I think we saw the worst in 2017,” he said, adding measures taken by the government, like the Home Ownership Campaign, had helped a bit.

Still, he said the main issue was that wages were still relatively low.

He also recommended that state planning authorities work with their local councils to develop property market strategies to avoid adding to the overhang situation.

Sulaiman also said banks should carry out feasibility studies on their own before approving loans to developers.

After the Asian Financial Crisis in 1997, Sulaiman said Bank Negara had advised banks to carry out such studies. It is up to the banks to implement this, he added.

Sulaiman said problems arise when the banks ask the developers to produce these feasibility studies.

He said the consultants appointed might not be objective and as such, undesirable findings might not be included in the developer’s supporting documents.

“The banks should do these studies on their own, using independent professionals, to get a true picture of the situation,” Sulaiman said.