Frozen for KL. Luxury and commercial units development approvals.

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Frozen. Development approvals of luxury high-rise, shopping malls and even commercial units which are over RM1 million are now frozen. This is the article in NST on 19th Nov 2017.  Finance Minister II: Indefinite freeze on luxury property projects from Nov 1 A friend forwarded this to me and said that the government is now taking action after that property bubble bursting article a few days ago. Here’s that article again.  Well, not really since the approvals were all frozen from 1st November onwards. That’s 2 weeks back. Finance Minister II Datuk Seri Johari Abdul Ghani shared that the luxury projects overflow is real and the supply by far outstripped the market demand for affordable homes. From the article, I think the freezing is for approvals and not a halt of the current developments. If it is a halt order, I am not sure how the current developers who are halfway in construction would react. Perhaps we can also wait for further clarifications soon since this should be a huge news next week.

In the article, he said, “There is a stark imbalance between supply and demand and we have to review the strategy in real estate development as we do not want such a situation to adversely affect the economy.” (Fully agree. The number of units which are beyond what’s affordable are majority today which meant that demand and supply do not meet.This is why the number of unsold units are rising; over 40 percent for H1 2017 versus the same period of H1 2016  This measure would be in place until the excess supply is cleared. their units above RM1 million. He also shared that the government would continue to drive development of affordable homes, especially those below RM300,000 per unit. He said, “In this sector, there is a disparity between the 48 per cent demand for affordable homes and the supply that only meets 28 per cent of that.” (This meant that the demand is by far more than the current supply. It also meant that if there are no measures to ensure the buyers do not sell immediately for profit, the prices of these affordable homes would also be rising very fast, as soon as they are completed probably.)  Here’s the article in NST again. 

I would like to reiterate that we do not have enough updated information about the market. Whether it is for buyers or builders or even policy makers. There’s really not enough information which meant that the policies are only formulated many months after, if not years. The luxury condominium market. Are they only facing issues this year or were there already oversupply for the past few years? Many of the numbers are also based on average which does not help much because the number we should be interested in would be the median. Let’s hope all these numbers would be released earlier so that no one could use the gap to speculate as well. Happy following and do note that if you need a home sweet home below RM400,000 it is still okay to proceed.
written on 19 Nov 2017 is everything about property related writings and news. Enjoy reading with a latte.

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