Housing industry supply and demand

Houses is reported under residential property in Malaysia. In general, National Property

Information Centre (NAPIC) under Valuation and Property Services Department Malaysia
categories houses in Malaysia as follows: (1) Single Storey Terrace; (2) 2-3 Storey Terrace; (3)
Single Storey Semi-Detach; (4) Detach; (5) Town House; (6) Cluster; (7) Low Cost House; (8)
Low Cost Flat; (9) Flat; (10) Condominium/Apartment. This section focuses on the trend of
houses supplied in Malaysia based on the type that was set by NAPIC. The discussion will be
started with the proportion of houses supplied in the second quarter of 2019 based on the type
of houses.
According to NAPIC (2019), 5,627,322 units of house was built in Malaysia up to
second quarter of 2019, the most built house in Malaysia is 2-3 storey house which have the
biggest proportion which is 22% and followed by single storey house which is 19%. The least
house built in Malaysia are basically town house and cluster which consist only 1% of house
built in Malaysia for both type of houses. Low cost house and low cost flat share the portion of
12% and 8% respectively (see Figure 1). The discussion continued by looking at the upcoming
supply of houses in Malaysia. NAPIC (2019) reported that a total of 472,957 units incoming
supply of houses is expected to be supplied and another 443,123 units planned to be supplied
after the end of second quarter 2019. The most houses that was expected to be built for the
incoming supply is Condominium/Apartment which is 169,279 units approximately 35.8% of
the total incoming houses supply while 153,796 units of Condominium/Apartment are planned
to be supply which share the portion of 34.7% of planned house supply.
The next section of the discussion will continue to discuss about the trend of house
supply for the past three years starting from 2016 up to 2nd quarter of 2019. Property Stock
Report done by NAPIC shows that in 2016, 2017, 2018, Q1 2019 and Q2 2019, the house
supplied was 4,945,140 units, 5,428,493 units, 5,577,922 units, 5,611,673 units and 5,627,322
units respectively. In term of growth, the trend shows that the growth of house supplied is
increasing as before the growth from 2016 to 2017 was 9.77%. Later, the growth of house
supplied between years drop to 2.75% in 2017 to 2018 and even only 0.61% and 0.28% growth
from 2018 to Q1 and Q2 2019 which gives the total of 0.89% (see Figure 2). This may be due
to the fact that the issue of overhang is the main concern of the government today will be
discussed later in the other section. This factor may be the reason why the trend of housing
supply is in decreasing trend.
 The discussion of supply will be incomplete if the demand of the market is not being
discussed as market are always involve supply and demand to meet its equilibrium. The
discussion will use the demand data from 2018 and Q1 2019 using the indicators of transaction
data or sales that have been taken place in the market. In 2018, the data shows that the total of
demand was 197,385 units of residential house where 62.7% of it is the house that priced below
RM 300,000 followed by 20.6% of houses priced between RM 300,000 to RM 500,000. When
the comparison done by looking at incoming and planned supply, the demand is only consisting
of 16.4% of the future supply which indicates that there will be access of supply for the next
year. The data from Q1 2019 shows that the total of demand taken place from primary and
secondary market was 52,199 units of residential house where most houses that has being
demanded by the market shows the same trend where houses below RM 300,000 has the most
demand which consist of 62.2% of the market followed by houses that priced from RM 300,000
to RM 500,000 which consist of 21.5%. In term of comparison with future supply, this demand
is 5.7% of future supply which may be shows a better number as for the first quarter it has
already reach 5.7% compared to 16.4% only during the whole 2018.
As the data given above, there are several issues and analysis that can be made about
the housing industry in Malaysia. First, the biggest proportion of house available in Malaysia
is not meant for the poor people to own a house as the low-cost houses are not dominating the
market. Second, the demand of residential house is much lesser than the upcoming supply as
both data shows that the demand was only below 30% of upcoming supply for the both years.
Thus, this shows a mismatch of supply and demand which maybe lead to the overhang issues
in Malaysia. The discussion of overhang will be discussed further in other section later.
Reference

National Property Information Centre (2018). Residential’s Transaction Data 2018.

Residential’s Transaction Data. [online] Kuala Lumpur. Available at:
http://napic.jpph.gov.my/ [Accessed 16 Oct. 2019].

National Property Information Centre (2019). Residential’s Transaction Data Q1 2019.

Residential’s Transaction Data. [online] Kuala Lumpur. Available at:
http://napic.jpph.gov.my/

National Property Information Centre (2018). Residential Property Stock Table Q4 2018.
[online] Putrajaya. Available at: http://napic.jpph.gov.my [Accessed 17 Oct. 2019].

National Property Information Centre (2019). Residential Property Stock Table Q1 2019.
[online] Putrajaya. Available at: http://napic.jpph.gov.my [Accessed 17 Oct. 2019].

National Property Information Centre (2019). Residential Property Stock Table Q2 2019.
[online] Putrajaya. Available at: http://napic.jpph.gov.my [Accessed 17 Oct. 2019].
Appendix

Figure 1: Type of houses in Malaysia by 2nd Quarter 2019

Type of Houses in Malaysia by 2nd Quarter 2019

Single Storey Terrace
2-3 Storey Terrace
16% 19% Single Storey Semi-Detach
2-3 Storey Semi-Detach
6%
Detach

8% Town House
22% Cluster
Low Cost House
12%
Low Cost Flat
8% Flat
1% 4%
1% 3% Condonium/Apartment

Source: National Property Information Centre

Figure 2: Housing supply trend and growth from 2016 to Q2 2019

Housing Supply
5800000 12.00%

5600000 10.00%

5400000 8.00%

5200000 6.00%

5000000 4.00%

4800000 2.00%

4600000 0.00%
2016 2017 2018 Q1 2019 Q2 2019

House Supplied (Units) Growth of house supplied

Source: National Property Information Centre