Moody's warns against growing Malaysian property oversupply
Johor has the largest share of unsold residential units in Malaysia (27pc), followed by Selangor (21pc), Kuala Lumpur (14pc) and Penang (8pc), according to its latest numbers
Moody’s Investor Service expects a sharp decline in Malaysian property prices as market valuation adjusts to reflect the lack of demand in the event of a protracted period of supply overhang.
The rating agency has said in its credit outlook report, that suspending new property development will not correct the oversupply situation over the next five years, when property projects now in development enter the market.
“The increasing oversupply and the prospects of a material property price correction will continue to build as new supply enters the market and poses a risk to Malaysian banks’ asset quality,” it said.
The report comes as the Malaysian government imposed a freeze order from November 1 on new development of shopping malls, commercial complexes and condominiums priced above 1 million ringgit (US$242,895), to address an oversupply in the country’s property market.
Moody’s also said, the developments are credit negative for Malaysian banks, and the quality of housing loans with high loan-to-value (LTV) ratios are most at risk.
