KUALA LUMPUR, Oct 12 — The price reduction threshold for foreign property ownership is a bold move to immediately deal with the massive surplus of high-end condominiums in cities, real estate consultancy Knight Frank Malaysia said today.
However, its managing director Sarkunan Subramaniam called for safeguards to be introduced to protect domestic buyers looking for more affordable second-hand homes around the same price range.
He suggested Putrajaya consider Australia’s requirement for foreigners to buy properties from the developer.
“Such rules could be implemented to avoid creating stiff competition with foreigners buying in the same field of secondary market properties.
“However, the property overhang is attributed to various factors such as mismatch of products and location rather than pricing alone.
“Some units remain unsold due to less favourable location in terms of accessibilities, distance and lack of amenities as well as product type,” Sarkunan said in a statement following yesterday’s announcement during the tabling of Budget 2020 in Parliament.
To reduce the overhang of condominiums and serviced apartments amounting to RM8.3 billion, the government announced the lowering of foreign buyer threshold for high-rise properties in urban areas from RM1,000,000 to RM600,000.
Sarkunan also commended the government for extending the Home Ownership Campaign (HOC) and Rent-To-Own (RTO) scheme till December 31.
“The HOC and RTO scheme are very good initiatives introduced by the government.
“Besides addressing the overhang issue of condominiums and serviced apartments, both HOC and RTO help to increase home ownership among Malaysians, in particular the lower income group,” he said.
However he pointed out there is concern that the property price sold may include the expected capital gain which may lead to higher property prices as compared to the current market value.
“This scheme has to be regulated and should be fairly practised by both the public and private sectors,” he added.
The HOC which was unveiled as an initiative under the National Housing Policy 2.0 to deal with the property overhang and to boost the lagging housing sector sees developers providing at least a 10 per cent discount for qualified properties that will be matched with stamp duty exemptions.
As many as 21,000 property units valued at RM13.44 billion have been successfully sold under the HOC, surpassing Rehda’s six-month initial sales target of RM3 billion.