“When they build houses worth millions which people cannot afford, an overhang is caused and the government has to come up with a new policy to address it.
“The developers should look at the high demand for affordable homes,” said state local government, housing, town and country planning committee chairman Jagdeep Singh Deo.
He was speaking to reporters after attending the Local Government Empowerment Convention in conjunction with the 7th Asia Pacific Urban Forum at the Setia SPICE Convention Centre in Bayan Lepas on Monday.
In Budget 2020, it was reported that the threshold on high-rise property prices in urban areas for foreign ownership would be lowered from RM1mil to RM600,000 meant to reduce supply overhang of condominiums and apartments.
Finance Minister Lim Guan Eng was quoted as saying the lower threshold was only applicable to existing unsold units, adding that it would not cover new projects that have yet to be launched.
The decision was to reduce the residential overhang amounting to 32,810 units as of June 30, 2019, valued at RM19.76bil, with condominiums making up 42% of the total value, or RM8.3bil.
Jagdeep said that in Penang, the minimum price for foreign purchases was RM3mil for landed property and RM1mil for condominiums on the island, while on the mainland, the threshold was set at RM1mil for landed property and RM500,000 for condominiums.
He said he would bring up the newly announced policy at the state exco meeting for consideration.
At the same event, Housing and Local Government Minister Zuraida Kamaruddin said every state could set their respective guidelines for minimum price range as different states have different property costs.
“I have no problems with Penang having their own guidelines, to suit their situation.
“They know the suitable threshold for their state. Hence, they can amend it,” she said after launching the convention.
On another matter, Jagdeep said he welcomed the RM10bil allocation for the Rent-To-Own (RTO) financing scheme as announced in the Budget 2020.
He, however, hoped the Federal Government would give priority to buyers from the low-income group.
“The scheme is to overcome the high loan rejection rate, especially in the low-income group who want to buy houses under the low-cost, low medium-cost and affordable categories,” he said.
Lim had earlier said the government would work with financial institutions to implement RTOs to help those who are unable to afford the initial 10% deposit to buy their homes.
“Through this scheme, for the purchase of the first home of up to RM500,000, financing of up to RM10bil will be provided by the financial institutions with support from the government via a 30% or RM3bil guarantee,” Lim said while tabling Budget 2020 on Friday.
Meanwhile, Zuraida said her ministry was planning to extend the councillors’ term period to five years.
“The current one or two years is insufficient for the councillors to carry out their duties effectively.
“The existing period is also insufficient to learn and use the knowledge they have to serve the people.
“This means the local councils will not be able to improve,” she said.