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Non-Landed and Service Residence Property Price Analysis in Johor (Year 2017)

Malaysia house hold income level, published by Bank Negara Malaysia.

https://www.bnm.gov.my/files/publication/qb/2017/Q3/p3_ba2.pdf

7.1% of Malaysia household have income > RM15,000 per month.

Recently I checked again the Brickz.my website and found some really useful data from it. We can actually view all the transactions of Service Residence in Johor, or even whole Malaysia.

Malaysia

Figure below shows total non-landed property transactions took place from Dec 2016 to Oct 2017 for the WHOLE Malaysia.

(3,635 Projects/Townships (19,092 Transactions) from Dec 2016 to Oct 2017)

Kuala Lumpur

Figure below shows the total non-landed property transactions took place from Dec 2016 to Oct 2017 in Kuala Lumpur.

(773 Projects/Townships (4,183 Transactions) from Dec 2016 to Oct 2017)

Penang

Figure below shows the total non-landed property transactions took place from Dec 2016 to Oct 2017 in Penang.

617 Projects/Townships (2,818 Transactions) from Dec 2016 to Oct 2017

Data below shows the transactions of all Service Residence in Malaysia from Dec 2016 to Oct 2017.

For a more meaningful comparison, we should just look at the price of service residence in a particular States. So I filter to just Johor below.

Below are all non-landed property sold from Dec 2016 to Oct 2017. A total of 1425 transactions took place (new and pre-owned).

Johor

Figure below shows all Service Residence sold from Dec 2016 to Oct 2017 in Johor.

So, what can we learn from the above?

  1. 30 Projects/Townships (198 Transactions) from Dec 2016 to Oct 2017
  2. Median price = RM338,000
  3. Mediam price Psf = RM446
  4. Only ONE unit sold at above RM800k (RM900k sold price)
  5. Only 4 units sold at RM700k and above (2.02%)
  6. Only 9 units sold at RM600k and above (4.545%)

Those that bought above RM600k units will have difficulty reselling later, as not many can afford such figure. For investor, price range of RM300k-400k is the most popular one.

Investment? Or Burnt?

Today’s Sin Chew Jit Poh newspaper mentioned about the property challenge in Year 2018. Highest unsold property in the past 10 years.

The total unsold property in Malaysia in the first quarter of 2017 is over 130,690 units. Double the figures from annual average from year 2004 to 2016. This is mainly due to many completed projects in 2017, especially high rise. Johor has the highest unsold figure, 27%, followed by Kuala Lumpur 14% and Penang 8%. 83% of the unsold properties are priced at RM250k and above, not affordable to many. 61% of the unsold property are non-landed type.

From the above data, I calculated that there are over 21,524 units of high rise property in Johor that is unsold yet. Only 1425 units of non-landed property transactions took place in the past 11 months (Dec 2016 to Oct 2017), and that includes new and pre-owned unit. In comparison, Kuala Lumpur has 4,183 transactions took place in the same period of time, and currently has much less unsold non-landed property than Johor.

Let’s said all 1425 transactions are new units (so many high rise in Johor are newly built in the past few years), it still needs 166 months to get all the 21,524 units to be sold. That’s around 13 years and 10 months. Of course this is just a very rough calculations, but you get the idea of how much is 21,524 unsold units means in Johor.

Kuala Lumpur has 11,161 units of unsold non-landed property, and at the rate of 4,183 transactions in the past 11 months, it only requires 2.45 years (29.35 months) to digest. Again, just a rough figure and to give you the idea of how bad the property condition in Johor.

Penang has 6378 units of unsold non-landed property. At the rate of 2818 transactions in the past 11 months, it requires only 2.075 years (24.9 months) to digest. Since Penang has lots of high rise, said 50% are new transactions and 50% are pre-owned resale transactions, still it takes only 4 years for Penang to digest all the leftover non-landed property.

Thought from a 22 Years Johor Residence

Johor has huge land. Most people in Johor prefer landed property, and there are still many newly pushed out landed property development in Johor. Price of landed property is similar to high rise (RM400k-700k for a 2 storeys teres house). Those who bought high rise are mainly just for investment, but due to the large amount of unsold high rise, it is quite impossible that owners will get good return of investment in the nearby period.

Buying non-landed property in Johor is not a good investment. There are just way too many unsold units, and most Johor residence still prefer landed property. Kuala Lumpur and Penang are still much better chance of getting good return of investment as compared to Johor, but one need to select the location and developer wisely. With so many unsold units, some small developers might run into financial trouble and stop the project halfway. If such case happened, you will still need to pay monthly loan to the bank but have no property to stay or sell.

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