KUALA LUMPUR: Total unsold units continue to rise for properties priced above the maximum affordable house prices in individual States, according to Bank Negara Malaysia’s (BNM) Financial Stability Review for the first half of 2019.

Meanwhile, the central bank warns of escalating vacancy rates in commercial properties, like office space and shopping malls.

“This contrasts with a strong recovery in housing transactions for units priced below RM500,000 recorded in the first quarter,” said the report.

Commenting on the residential properties in the first half of this year, the central bank noted that house prices continued to go up but at a more moderate pace supported by the sustained demand for affordable properties.

“While the mismatch between housing supply and demand is likely to take some time to resolve, firm demand for affordable housing is expected to mitigate risks of a sharp and broad-based decline in house prices,” said BNM.

BNM cautioned that in the non-residential segment, the incoming supply of new office space and shopping complexes (OSSC) remains significantly higher than recent average annual demand.

“This is likely to further compound already elevated levels of vacancy rates for prime office and retail space, and prime retail space per capita in major cities. Banks remained cautious in lending to this segment, with low exposures that continue to be largely performing.

For the lenders, BNM views that the commercial banks are on steady footing to withstand any shock from the broad property market.

“Based on the Bank’s sensitivity analysis, banks have sufficient capital buffers to withstand severe losses under adverse stress scenarios in the broad property market which incorporate potential spillovers to other economic sectors that are highly dependent on the performance of the property sector,” the report said.