KUALA LUMPUR - The Malaysian government has frozen indefinitely approvals for luxury property developments from Nov 1, to control the national oversupply of houses and prevent it from adversely affecting the economy.
Second Finance Minister Johari Abdul Ghani said on Sunday (Nov 19) that the Cabinet decided this after scrutinising a detailed central bank report published in June on the real estate glut, reported the New Straits Times.
He said there was an overflow of luxury projects which had outstripped the market demand for affordable homes.
“The Bank Negara report takes into account high-rise condominiums, shopping malls and commercial units, including those that are worth more than RM1 million (S$S$325,745),” he said after an event in Kuala Lumpur.
As a result, the minister explained, the Cabinet decided to temporarily stop developments of shopping malls, commercial complexes and condominiums which sold their units above RM1 million.
“This will be temporary until we can clear all the the excess supply. There is a stark imbalance between supply and demand and we have to review the strategy in real estate development as we do not want such a situation to adversely affect the economy,” he said.
According to the NST, the minister said the government would continue to drive the development of affordable homes, specifically those priced below RM300,000 per unit.
“In this sector, there is a disparity between the 48 per cent demand for affordable homes and the supply that only meets 28 per cent of that. This is the area that needs to be addressed swiftly,” he said.
Datuk Seri Johari said the freeze would continue until there was a rise in market demand for expensive properties.
Meanwhile the Johor government said it is looking at ways to relax regulations on foreign ownership of homes in an effort to reduce the glut of unsold properties in the state, reported The Star.
Housing and Local Government committee chairman Md Jais Sarday said under existing rules, foreigners could only purchase properties that are priced over RM1 million.
"Maybe, we can look at relaxing the requirements based on the size of the houses, allowing them to purchase homes which are more than 1,000 sq ft but less than RM1mil," he said on Sunday.
Datuk Md Jais, however, said that nothing has been finalised, as it would require discussions with the federal government.
He was asked to comment on a recent central bank report on housing issues nationwide, which warned that the number of unsold residential properties are at their highest level in a decade, with the largest oversupply found in Johor.
Mr Md Jais said they hoped to formulate new strategies and policies to spur the housing industry by the beginning of next year.
Currently, there are more than 120,000 unsold properties in the state.
The properties include landed houses, high-rise units and commercial factories.