SHAH ALAM - The mismatch between property values and income levels, along with shifting generational trends, are among six key factors contributing to the surplus of unsold homes priced between RM300,000 and RM500,000 in the country.
Other factors include high living costs, non-strategic locations, market oversupply and concerns about interest rates and bank lending policies.
Property investment expert Dr Azizul Azli Ahmad explained that the trend of unsold homes is not a new issue, as it has persisted for several years.
"I see the primary factor being the mismatch between price and income. Essentially, the financial capacity of potential buyers for these homes mainly falls within the M40 income group, whose household expenses range between RM4,000 and RM6,000 per month.
"For a home priced at RM300,000, the monthly repayment is approximately RM1,500, while for RM500,000, it is around RM2,500.
"This means that up to 30 per cent of their income goes toward housing costs, which is very burdensome. Ultimately, this has led to a surplus of homes in the market,” he told Sinar.
He made these comments when asked about the unsold homes priced between RM300,000 and RM500,000, which were reported to be the most unsold property segment in the third quarter of 2024.
Based on the latest report from the National Property Information Centre (NAPIC), unsold residential properties accounted for 31.9 per cent of the property market, comprising 7,003 units worth RM2.78 billion.
According to Azizul, the second factor stemmed from high living costs, which prompted many to opt for renting over purchasing homes.
"Third, the non-strategic location. Developers observed significant demand for such homes in the past few years, leading to properties being built in various locations.
"Fourth, I consider market oversupply as a major factor. Many houses are built within the same price range. For example, when the government set the price for PR1MA homes at RM300,000, developers rushed to build homes within that range. The resulting competition led to an oversupply," he explained.
The fifth factor, he said, involves concerns over interest rates and bank lending policies, particularly linked to the Overnight Policy Rate (OPR).
However, he noted that the OPR has not risen in recent years and has returned to pre-pandemic levels.
"Sixth, there is a noticeable trend among the newer generation, particularly Gen Z, regarding homeownership. They are exposed to an overwhelming amount of information, which they struggle to filter effectively.
"This information overload makes them hesitant to purchase homes. Instead, they prefer a flexible lifestyle, favouring travel over long-term commitments,” he added.
To address this issue, he suggested that developers adjust prices and focus on building homes in the RM200,000 to RM300,000 range in more strategic locations.
Additionally, the government should reinstate attractive incentives for first-time homebuyers and emphasised wage increases and economic policies to help more citizens afford their own homes.