Or is it oversupply?
House prices are going up by the year, and for many, buying a home in established areas (such as the Klang Valley) or states (for example, Penang) is not a viable option. Fortunately, Malaysia is a pretty big country with lots of other states that are still affordable in terms of house ownership and cost of living.
While news reports may say that 2016 is looking to be a bleak year for the property market, it also means that the weak property sector will be a beneficial one for buyers looking to purchase a home to call their own, as well as for investors who are not afraid to weather the storm while waiting for the rainbow (and the proverbial pot of gold at its end).
The table below by the National Property Information Centre (NAPIC) shows the existing stock, incoming supply and planned supply for residential, shop and industrial properties in each state as at the second quarter (Q2) of 2015.
(Source: NAPIC)
We know it can be a little overwhelming to filter out the necessary details, so we’ve extracted the numbers for you. Take a look below to see which are the top states in Malaysia with the most residential properties, including existing units and future supply.
Table by Estate123.com
It comes as no surprise that the Klang Valley (Selangor and Kuala Lumpur) have the highest amount of residential properties, be it existing or incoming. In fact, it was just reported today that Selangor has decided to freeze all approvals for projects involving serviced apartments, small office home office (SOHO) and small office versatile office (SOVO) units for the next 6 months due to oversupply. As more and more people move into the Klang Valley, lured by job opportunities and life in the city, developers are building more – yet smaller – units to accommodate demand in the past few years.
Johor is also currently experiencing a significant increase in properties (not only residential) due to the Iskandar Malaysia economic region, which is set to be the next major hub in Malaysia. Johor has long been the choice of residence for those working in Singapore but opting to travel across the causeway in order to enjoy the lower cost of living and accommodation and thus gain more bang for their (Singaporean) buck – so to speak.
Penang is, of course, not only the destination of choice for retiring expats but also for generations of Malaysians who love their familial roots as well as the local food. Scarcity of land here has made real estate here as pricey as those in KL or Selangor. Thanks to ongoing land reclamation works and plenty of property development projects mushrooming on the island as well as mainland, Penang is set to attract buyers and investors for a long time yet – which means that prices will likely remain on the high side.
Does this indicate a property glut for 2H2015 or even 2016? Industry experts in Malaysia have admitted that the property market is soft, but there are no fears of a property glut. The current situation is simply an effect of a soft economy due to the weak ringgit and lower commodity prices. Reports of unsold properties are not surprising when economies are not as ideal as they used to be, and is a common occurrence in many cities, not only Malaysia.
So, what other choices are there for those looking to purchase affordable housing? Besides applying for affordable housing through the PR1MA scheme, potential house owners can look towards states like Perak and Negeri Sembilan for residential properties near to cities which offer good job and education opportunities.
For those working in Selangor or Kuala Lumpur, it would not come as a surprise to discover that many opt for the daily commute between Seremban or Nilai and their workplace, as the 1-hour drive between cities is comparable to being stuck in traffic within the city itself during peak hour. The intercity commuter train (KTM) is also an option for those with access to a station near to where they stay and public transport close to their workplace. In the past 10-20 years, Seremban has grown from a sleepy town to a bustling city that is still quite affordable in terms of housing and cost of living, while providing many, if not most, of the amenities and entertainment that KL has to offer. Places like Nilai and Kajang which are located ‘in between’ the two big cities have also been affected and subsequently seen rapid growth and population.
Likewise, Perak has also expanded significantly and more developers are seeing the value of building their projects in the state. As a matter of fact, I have personally known a few relatives and friends who have returned to their hometown of Ipoh after working in KL and Singapore for a few years, not only to be closer to their family but also because of good job opportunities coupled with lower cost of living. The same goes for Sabah and Sarawak, although Pahang may be a bit more negatively affected due to the recent bauxite mining issue. The developers launching projects in these states are definitely on to something.
Faced with high cost of living and increasing house prices, would you choose to relocate (or return) to other states, or would you tough it out in the major cities? Would you prefer to rent in the city, or purchase a property in the suburbs? Share with us in the comments or on our Estate123.com Facebook page!
