Freeze on new RM1m properties
Published on: Monday, November 20, 2017
Kuala Lumpur: The government has announced an indefinite freeze on the development of luxury properties worth more than RM1 million per unit.The freeze, according to Second Finance Minister Datuk Johari Abdul Ghani , had come into effect since Nov 1.He said Cabinet had recently scrutinised a detailed central bank report published in June which revealed an oversupply of luxury units.
ADVERTISEMENT
"The Bank Negara report takes into account high-rise condominiums, shopping malls and commercial units, including those that are worth more than RM1 million," he said.However, Johari said this was merely a temporary measure until all the excess supply is cleared and there was a rise in market demand for expensive properties."We are worried that an oversupply of such development would have an adverse effect on the economy. For now, we want developers to focus on the development of affordable homes, especially those priced below RM300,000 per unit.
ADVERTISEMENT
"At present, there is a disparity between demand for affordable homes and the supply."He said this disparity needed to be addressed immediately as there was still a huge demand for affordable houses.
ADVERTISEMENT
"However, as soon as demand for luxury homes pick up again, we will review the freeze," he added.In its report, Bank Negara said Malaysia's property market was facing an oversupply of non-affordable homes and idle commercial space, while demand for affordable housing was not being met. Johari said there was 48pc demand for affordable homes but the supply only met 28pc.Under the 2018 Budget, Prime Minister Datuk Seri Najib Razak allocated RM2.2 billion to build 248,000 more affordable homes.BNM, in its report said Johor may end up having the highest number of unsold residential properties and potentially the largest excess supply of retail space."As such, it is timely for all parties to act now to mitigate any potential risks to macroeconomic and financial stability," it said.The issue made the headlines recently with Deputy Finance Minister Lee Chee Leong saying that the number of completed residential units which have not been sold rose by 40pc to 20,807 units in the first half of 2017 compared with the same period last year."Condominiums and apartments costing over RM500,000 dominate the unsold homes in Malaysia," he said, adding that the units were worth RM12.26 billion.BNM projected that one in three offices will be vacant by 2021 in the country and sees 140 new malls entering the market by that year.BNM Governor Tan Sri Muhammad Ibrahim said imbalances in the property market posed significant risks to the overall economy in the event of a shock.He said Malaysia had record high unsold residential properties of about 130,690 units until the first quarter this year, mainly for houses priced above RM250,000.He also said the vacancy rate for office space is expected to be at 32pc in 2021.With about 140 malls entering the market in key states by 2021, he said this would exacerbate the oversupply potentially becoming more severe than during the 1997 Asian Financial Crisis.BNM, in its report, said this is a source of concern as the property sector has linkages to more than 120 industries, collectively employing 1.4 million Malaysians.Housing loan approval rate stood above 70pc, while the rejection rate remained below a four-year average at 23.3pc.Stay up-to-date by following Daily Express’s Telegram channel.
Daily Express Malaysia
