Local analysts fear the government’s decision could lead to a property bubble or foreign invasion
In an attempt to address Malaysia’s current property market situation, the government has revealed its plan to reduce the price threshold for foreigners, from MYR1 million (USD330,000) to MYR600,000 for each condominium unit. But, according to The Straits Times, local analysts have going concerns over the possibility of a property bubble.
The chief economist at conglomerate Johor Corporation Azrul Azwar believes that the government’s decision will not only encourage owners to increase property prices in the secondary market, but it could also persuade the developers to build high-rise units above the minimum price.
“Developers should be compelled by market forces to bring down their selling prices as part of corrective measures to bring the oversupplied high-rise residential property market back to equilibrium,” he said.
Azrul also suggested that the government should fine property developers for unsold units.
In Johor alone, over 51,000 properties are reported unsold, with 60 to 70 percent priced above MYR600,000.
Nevertheless, Azrul does agree that the decision could reduce the number of unsold properties in the southern state, saying that it is “almost certain to open the floodgates for Singaporeans to snap up urban high-rise properties in Johor that would cost them less than USD200,000.”
“The lower price floor is likely to help reduce much of (Johor’s) property overhang, but at the cost of a foreign invasion, particularly from Singapore, Hong Kong and China,” he added.
In response, finance minister Lim Guan Eng said that the new policy is only applicable for existing unsold apartment and condominium units.
“It does not include new projects that are yet to be launched. This measure is expected to benefit the property sector without affecting the interest of Malaysians,” said Lim.
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