The number of overhang properties is expected to remain high in 2021 based on income level, locations and prices, according to Rahim & Co International Sdn Bhd.
Its research director Sulaiman Saheh referred to Rahim & Co's Property Market Review 2020/2021 which showed that three states, Johor, Selangor and Kuala Lumpur recorded the highest numbers of overhang properties at 33,000 units, 8,700 units and 7,800 units respectively.
Other states such as Perak and Penang also posted higher numbers at around 4,000 units each.
Speaking to reporters after the release of the report today, Sulaiman said properties within the city or urban areas would see a strong demand and likely reduce the number of overhang property if prices were adjusted.
"What we see right now is that developers are giving more discounts on top of the Home Ownership Campaign (HOC) which is due to end on May 31.
"Overall, we still think that overhang numbers are unlikely to drop or significantly drop in 2021; it could be stabilising but it is expected to stay high not just because of the movement control order," he said.
Meanwhile, Rahim & Co's Real Estate Agency chief executive officer Siva Shanker said the availability of COVID-19 vaccine and better sentiments in 2021 would help to reduce the overhang.
"I agree with Sulaiman saying that the overhang will not reduce much because we have so much overhang numbers, but we can expect the residential market to recover slightly and perhaps move upwards a little bit on the back of a successful vaccine programme and renewed sentiments," he said.
Based on the report, the ever-growing burden of overhang dwelling units (including serviced apartment and SOHO types) has reached 55,415 units worth RM39.69 billion.
To resolve the issue, Rahim & Co's Petaling Jaya Office director Choy Yue Kwong suggested an in-depth study on the root cause of the overhang.
"Adding a layer of complexity to this completed-yet-unsold units number is the improvement seen in unsold units that are under-construction or yet-to-be-constructed.
"Part of the solution includes a more informed-decision for project planning and approvals through independent market studies as well as a robust and transparent data system for the market," he said.
Earlier in his presentation, Sulaiman said 2020 as a whole, was a year of accelerated readjustment and technology adoption as well as a test on perseverance as people alike faced the odds of a global pandemic scare and precarious economic conditions highlighted by depressing growth rates and raised unemployment.
"Yet positive resilience and determination remained beneath the surface and in times of movement relief, demand came through as proof that the market is still there despite lockdowns and standard operating procedures.
"Optimism is held for the turning point to be in the latter parts of 2021 with the vaccine about to be mobilised, but with the more recent resurgence of cases and reimplementation of lockdowns, a further recovery delay to 2022 would not be a surprise," he said.
Pandemic aside, he said pre-existing problems of unaffordability, oversupply and income levels to cost of living remain and need to be solved and tackled effectively and holistically to ensure long-term sustainability of the nation's property market. - Bernama