BNM: Housing market improves but number of unsold units still high

PETALING JAYA: Some improvements in housing market activity were visible heading into 2022, although the number of unsold houses remained high as this reflects pre-existing affordability issues in the housing market, which has worsened since the onset of the pandemic as consumer incomes were affected.

According to Bank Negara Malaysia’s (BNM) Financial Stability Review Second Half 2021 released yesterday, the number of unsold houses remained elevated at 180,702 units in the third quarter of 2021 (Q3’21), compared with 181,463 units in the Q2’21. Of this, 31.4% are overhang units while the remainder (68.6%) are units under construction. Unsold houses are mainly priced above RM300,000 (75.4% of total unsold houses) and high-rise properties, in particular, serviced apartments (36.5% of total unsold houses).

“Disruptions caused by the pandemic partly contributed to the slower clearance of unsold housing stock despite ongoing home purchase incentives. However, market activity is expected to improve in Q4’21 driven by the resumption of economic activities,” BNM said.

Correspondingly, BNM said higher loan applications were recorded across all price segments in the second half of 2021 (H2’21). The significant increase in loan applications in the final two months of 2021 coincided with the Home Ownership Campaign that ended on Dec 31, 2021. Improving employment prospects and the low interest rate environment further supported housing demand. Demand for housing was largely driven by owner-occupiers, with 57.3% (H1’21: 55.8%) of approved housing loans in H2’21 granted to owner-occupiers.

The continuation of tighter containment measures from Q2’21 continued to weigh down housing market activity in Q3’21. Consequently, while transaction volume increased marginally in Q3’21, it remained below the quarterly average volume of transactions recorded in recent periods.

In this regard, supply adjustments have continued with more new housing launches shifting towards lower- and mid-price market segments. The share of property launches priced at RM500,000 and below increased significantly in Q3’21 (Q3’21: 88.1%; H1’21: 67.7%; 2015-2019 average: 65.9%). This should help to cap a further significant increase in unsold housing stock. Nonetheless, the bulk of new launches remain beyond the affordable price segment, with only 35.6% of new launches since 2015 priced below RM300,000, indicating further room for price and supply adjustments to improve overall housing affordability.