LANGKAWI - Malaysia's Prime Minister Mahathir Mohamad said on Sunday (Oct 13) that offering lower property prices to foreign buyers was meant to reduce the glut of high-rise homes in the country, and not mean to give them citizenship.

Finance Minister Lim Guan Eng said at the tabling of the 2020 Budget on Friday (Oct 11) that Malaysia is reducing the minimum prices for foreign buyers buying high-rise units in urban areas at RM600,000 (S$197,000) from next year, from RM1 million currently.

The move came after months of warnings from the central bank and property developers of the huge property overhang in the country, especially at the top end involving condominiums.

Mr Lim said there is a glut worth RM8.3 billion in high-rise units in the second quarter of 2019.

But the move has attracted flak from local buyers, who are worried that property developers will now build yet more condos and apartments, and price them at the RM600,000 floor price to attract foreign buyers, instead of at lower prices for Malaysians to buy.

Others claimed that the lowering of prices would mean that more foreign buyers could become Malaysian citizens. Under Malaysian law, a person who works in the country and has a permanent address here could apply for permanent residency, and later apply for Malaysian citizenship.

Said Tun Mahathir, when asked about the matter: "If foreigners bought the property, we will not give them Malaysian citizenship. They can only use it as their holiday home."

He said that Malaysians could buy these same properties, as quoted by Malay Mail online news.

"We have built so many houses, but they were not sold. When a housing project is not sold, it causes the country to suffer losses.

"We want to get rid of this property overhang... so that we can raise the price back to RM800,000, RM1 million or RM2 million. This is a way to encourage the sale".