Difference in property price threshold makes projection impossible, says minister

Respective state govts determine the price thresholds for foreign home ownership, says Zuraida


IT WOULD be difficult for the government to set any targets of foreign acquisitions of unsold luxury properties as set prices differed between states.

Housing and Local Government Minister Zuraida Kamaruddin (picture) said despite the proposed ceiling price tabled in Budget 2020, respective state governments determine the price thresholds for foreign home ownership.

“At the moment, there is no specific formula, plan or target on foreign home ownership.

“Home prices for foreigners are set by the respective state governments, whereby different states have different thresholds,” she said at the Dewan Rakyat yesterday.

Zuraida was responding to a query from Tan Sri Annuar Musa (Barisan Nasional-Ketereh) who wanted to know if the government had set any targets of foreign ownership for the high-end property market.

Finance Minister Lim Guan Eng, when tabling the proposed budget for 2020, announced the government would lower the threshold for foreigners to purchase properties from RM1 million to RM600,000.

But the new threshold is only for high-rise properties which are unsold by developers. Malaysia is facing a critical glut of unsold highrise condominiums and service residents. Figures showed condominiums and apartments worth about RM8.3 billion remained unsold at the end of the second quarter of 2019.

The move is expected to mop excesses and allow developers to launch other products.

Selangor and Penang’s ceiling price for foreigners to purchase properties is set at RM2 million, while Terengganu, Johor, Pahang, Kuala Lumpur, Putrajaya, Negri Sembilan, Perlis, Sabah, Kelantan, Melaka, Seberang Prai, Perak and Sarawak — the threshold price is RM1 million.

Zuraida said the Ministry of Finance was asked to help solve the overhang issue as only 0.4% or 368 foreigners owned homes above RM1 million based on data from January to June this year, while 99% of the properties were bought by locals.

She said the difference in setting the threshold price and allocation of the types of developments, hindered a clear and objective projection of demand and supply.

“As of now, all we have is the state government’s policy, but no proper statistics on the sale of high-end and low-cost properties. Some states set a 30% allocation for low-cost homes, while others 40%.

“This is why we need a more systematic way like setting a ceiling price (for foreign ownership), so that a more accurate analysis and projection can be made in the future to overcome the worsening property glut,” she said.

Based on figures between 2014 and the end of 2018, the number of unsold completed residential units rose from 11,816 to more than 45,000, largely contributed by serviced apartments and small office home offices.

The value of residential overhang rocketed 635%, according to the National Property Information Centre (Napic) records.

The residential overhang was valued at RM4 billion at the end of 2014, but rose to RM29.7 billion by the end of 2018, Napic records showed.