PETALING JAYA: The House Buyers Association (HBA) has cautioned that the lower threshold on high-rise property prices to RM600,000 from RM1mil previously for foreign ownership could see more developers offering properties at higher prices.
HBA honorary secretary-general Datuk Chang Kim Loong, in a statement, said the proposal would instead incentivise real estate developers to target foreigners instead.
“Once again, although this proposal seems to solve the issue of unsold high-end properties, it again has the consequences of encouraging developers to ignore building affordable properties (costing below RM300,000) and focus on building higher-end properties costing more than RM600,000 with the aim of selling them to foreigners.”
He said the proposal was similar in spirit to the proposal by the Housing and Local Government Ministry to market unsold high-end properties to foreigners, in particular from Hong Kong and China.
“In the case of Johor, the natural target market will obviously be Singaporeans or professionals working in Singapore, ” said Chang.
Under Budget 2020, the government has lowered the threshold on high-rise property prices in urban areas.
The measure is aimed at reducing the overhang of condominiums and apartments, which amounted to RM8.3bil in the second quarter of 2019.
Chang said the situation would be more acute in Johor, given the very high property prices in Singapore.
He added that if the threshold was reduced to only RM600,000 as proposed, it would be less than S$200,000 (after the currency conversion), which would open the floodgates for foreigners, especially those based in Singapore, to buy properties in Johor.
“The locals will be drowned with the influx of these Singapore-based buyers. This will inadvertently push housing developers in urban areas to raise the price of properties in the range of RM400,000 to RM500,000 to beyond RM600,000.
“This will create a chain effect where developers will also push up property prices which previously only cost RM300,000 to RM400,000 to about RM500,000 to RM550,000 to take advantage of the situation.”
Chang also added that existing property owners would also want to capitalise on the situation by increasing the selling prices of their units.
“As a result, property prices could see a sudden shock effect of a high increase across the board.
“This will not only result in locals being squeezed out of the housing market but also increase the risk of a property bubble, as this sudden rapid rise in property prices caused by lowering the minimum price threshold is definitely not sustainable in the long run.”
Did you find this article insightful?