Overhang redefined

Move to ensure actual market conditions are reflected

NST-PROP 26/07/2003 By Eileen Ng

The National Property Information Centre (Napic) is ready to adopt the new definition of the term "property overhang" in its future residential property stock reports.

In welcoming the government's move to redefine the term which is commonly used to describe unsold properties in the country, Napic director Abdullah Thalith Md Thani said the agency is now in the midst of discussion with the Ministry of Housing and Local Government and Finance ministries.

"All along, the term overhang was given a negative connotation. Thus, as the economy improves, (the redefinition) is timely to shed that image, " Thalith told PropertyTimes. Napic is under the Ministry of Finance's Valuation and Property Services Department.

He pointed out that redefining the term does not imply that the data presented in its previous overhang reports had all along been incorrect.

Thalith was responding to Housing and Local Government Minister Datuk Seri Ong Ka Ting's statement last week that the meaning of property overhang had to be reviewed to ensure it reflects market conditions.

Ong said various authorities realised that there was a need to take a second look at the definition and its parameters, and particularly to exclude the properties that have not yet been built.

He said this ministry, together with the Finance Ministry and other relevant bodies such as Real Estate and Housing Developers' Association (Rehda), would work on a new definition for property overhang.

On when both Napic's stock and overhang reports for the first quarter of 2003 would be released, Thalith said it would depend on when the redefinition is completed.

Rehda president Datuk Jeffrey Ng welcomed the exercise, saying the association had always voiced its concern that the property overhang figures sent the wrong signals to the industry.

"For the past nine months, we have been expressing our views on the way property overhang is worked out ... we are glad that this is finally being acted upon to ensure accuracy and reflect actual market conditions," Ng said.

Although the National House Buyers Association (HBA) welcomed the move, its secretary-general Chang Kim Loong requested that data of newly launched, abandoned and delayed projects also be provided.

"We would also like to see a list of projects under construction categorised from year one to three," Chang said.

Ong had said that previously, unsold properties included the incoming supply of properties, such as new launches. The government now realised that projects for which construction has not begun should not be considered as unsold.

"Thus, after much discussion, we agreed that the parameter should only include properties built and waiting Certificates of Fitness (CFs), and those under construction," Ong said.

In elaborating, Ong said  that the latest Napic report, which was released in December last year, put the nation's total residential property overhang at 59,750 units.

If the new parameters were applied, Ong pointed out that the oversupply would be 28 per cent lower at 43,353 units with 6,715 units awaiting CFs and 36,638 units under construction.