Temporary property overhang

Datuk Sim Kiang Chiok.

KUCHING: The current residential property overhang is only temporary, said Sarawak Housing and Real Estate Developers’ Association (Sheda).

Its Kuching branch chairman Sim Kiang Chiok foresees that rural-urban migration and population growth could invigorate the property market especially when banks are willing to lend based on more relaxed guidelines.

This could happen with a return of job security and restoration of world economic and market confidence after the movement control order (MCO) implemented due to the Covid-19 global pandemic, he said.

“The total number of residential houses transacted in Sarawak last year was 9,914 units and the overhang was 1,966 units up to the first quarter of this year – which is about 20 percent of the transacted number of houses,” he said, citing data from the National Property Information Centre (Napic).

Of the 1,966 overhang residential units in Sarawak, he said that the strata titled properties such as townhouses, condominiums and apartments constituted 1,082 units, and 884 landed units.

“In Kuching, there were 994 overhang residential units made up of 755 strata titled and 239 units of landed properties,” he told New Sarawak Tribune yesterday.

Sim also foresaw that with the lockdowns here and globally due to Covid-19, the property market would be weak until economic resumption and confidence in the business market was restored.

“In any property development, the tripartite relation of the developer, purchaser and financier (banks) must be restored; only then will the property market be active and vibrant,” he said.

He said that housing was one of the basic needs and there would always be a demand for houses, although it might be less so during this transition economic restoration period following the Covid-19 lockdown.

In terms of the overhang on commercial units, he said that there were 238 units of shops and 60 units of service apartments at the end of the first quarter of this year.

“Before the MCO, the overhang of residential properties could be due to poor location, pricing mismatch, suitability of building designs, development layout, and ease of raising financing,” he explained.

He said that now that the nation was going through its lockdown exit plan, time was required to restore market confidence and business activities.

“In this transition period, there will be a demand for property from T20 earners, upper M40, and those with good employment such as the civil servants where their income is secure and constant – whereby these categories of income earners can still secure financing from banks to buy properties,” Sim explained.

He noted that the federal government in its recent National Economic Recovery Plan (Penjana) had re-introduced the Home Ownership Campaign (HOC) from June this year until May 31 next year to generate interest in the property market and assist the residential property market by giving stamp duty exemptions and developers giving at least ten percent discount on the approved selling price.

“The real property gains tax (RPGT) exemption for up to three residential properties and third housing loans being exempted from the lower financing margin are much welcomed for those who are in need of purchasing a house.

“My hope is that these incentives can be extended to all types of properties rather than limiting it to residential properties only, so that the effect on property market can be more substantial,” he added.