News: Lower Price Threshold Necessary To Prevent A Crisis, Says PM

Oct 16, 2019

Prime Minister Tun Dr Mahathir Mohamad explained the government’s decision of lowering the price threshold for foreign home buyers, saying it is necessary to prevent the present property overhang from ballooning into a crisis.

“Property overhang can result in crisis so we have to get rid of this overhang so that the market for property becomes healthy again,” he said.

“We need to sell them or the developers will get into trouble.”

Read more: 6 Factors To Consider When Buying A Property

Dr Mahathir shared that he was previously critical of implementing such measures in Johor’s Forest City where properties were said to be high-end and freehold to protect local homebuyers, reported Malay Mail.

“Forest City was quite different… the property was freehold and luxurious… only foreigners can afford to buy,” said the prime minister.

“This is not for foreigners who can afford to buy,” he added, referring to the announcement that foreigners can now acquire high-rise residential properties in Malaysia at a lowered minimum price of RM600,000 from RM1 million previously.

“Obviously there are people who are not so rich and they want to have a flat here and they can buy cheaper flats and apartments.”

Unveiled during Finance Minister Lim Guan Eng’s tabling of Budget 2020, the lower price threshold for foreign property buyers drew mixed reactions.

Lim has said the move was necessary to reduce the current oversupply of apartments and condominiums, which amounted to RM8.3 billion in Q2 2019.

He also assured that the measure, which was aimed at encouraging the sales of properties from developers, would not affect the secondary market.

Critics, however, believe that housing developers may take advantage of the situation by resorting to high-rise property speculation to jack up property prices.

 

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