KUALA LUMPUR • The Malaysian government has temporarily frozen approvals for luxury property developments since Nov 1, to control the national oversupply of homes and prevent it from adversely affecting the economy.
Second Finance Minister Johari Abdul Ghani said yesterday 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$326,000)," he said after an event in Kuala Lumpur.
As such, the minister explained, the Cabinet decided to temporarily stop developments of shopping malls, commercial complexes and condominiums which aim to sell units for above RM1 million each.
"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 NST, the minister said the government would continue to drive the development of affordable homes, specifically those priced at less than RM300,000 a 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 that under existing rules, foreigners could buy only properties that are priced more than 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 RM1 million," he said yesterday.
Datuk Md Jais, however, said that nothing had been finalised as it would require discussions with the federal government.
The Bank Negara report had warned that the number of unsold residential properties nationwide is at its highest level in a decade, with the largest oversupply found in Johor. Currently, there are more than 120,000 unsold properties in the state.