Raja Kamarul Bahrin Shah, who was the deputy housing and local government minister from 2018 to 2020, said strong government intervention is needed to deal with the overhang situation.
“The situation can only improve if developers are willing to bring down unsold property prices, through tax incentives from the government,” he told FMT.
Raja Kamarul said the government must formulate new “aggressive” and creative policies to ensure more affordable housing for inner-city living, especially for lower and middle-income groups.
“For example, developers who bring down unsold property prices may be given tax exemptions for future developments to ease their funds that may have been tied up due to the overhang units,” he said.
He said the government should also direct financial institutions to be more flexible in giving housing loans to provide better financial access to the lower and middle-income groups.
The National Property Information Centre (Napic) defines “overhang” as residential units which have received certificates of completion and compliance (CCC) but remained unsold for more than nine months after launch.
According to Napic, the third quarter of 2021 saw more than 18,000 unsold high-rise units, making up the bulk of overhang properties. Figures also showed that up to 75% of unsold properties were priced between RM300,000 and RM1 million.
The Malaysian Institute of Estate Agents (MIEA) said developers who hold on to overhang properties will also face problems with their cash flow.
“Overhang specifically affects the developers of the projects who are holding on to all these unsold units and having to maintain them affects their cash flow,” MIEA president Chan Ai Cheng said.
She said the high number of overhang units may also paint an inaccurate picture of market conditions, causing more potential homebuyers to tighten their purse strings.
“It may not reflect the market situation at all, which is the irony of it. It could really just be the wrong property in the wrong location, hence, no buyers,” she told FMT.
The Real Estate and Housing Developers’ Association (Rehda) said the overhang situation can also be attributed to developers in many states being required to build affordable housing in conjunction with their regular units without demand.
“This causes open market units to be priced higher to subsidise building their lower-cost counterparts, resulting in more expensive housing prices,” Rehda acting president NK Tong said.
He said the other effect was that more lower-cost units were being built without demand, thus worsening the overhang problem.