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Increasing prices for foreigners will ‘push’ developers to build more affordable homes?

Posted in Property, KL / Selangor

Do we know how many percent of the property transactions in Malaysia were due to foreigners? (non-Malaysians). Is it true that foreigners are buying too many properties in Malaysia and thus pushing up its prices? By the way, foreigners are buying into Melbourne’s properties in huge numbers. Earlier article here: Foreign purchase of Melbourne’s properties  According to Real Estate and Housing Developers Association Malaysia (Rehda) president FD Iskandar Mohamed Mansor, only 1 percent of the total property transactions in 2017 involved sales to foreigners. He said that the figure was based on information from National Property Information Centre (Napic). Valuation and Property Services Department (JPPH) director-general Nordin Daharom had been reported as estimating some 300,000 property transactions for 2017. This is the full article for reference in FreeMalaysiaToday: Only 1% of 2017 sales went to foreigners  Since foreigners are not really buying that many properties currently, plus the floor price of RM1 million, are there any actions we can take to ‘discourage’ them further? (Assuming they are the ones pushing up prices)

The government may increase the minimum property prices for foreign buyers. The Housing and Local Government Ministry secretary general Datuk Mohammad Mentek said, “The move to review the floor price would give local potential buyers a wider opportunity to own a property in Malaysia. Also, due to our foreign currency exchange rate, the threshold is actually quite low if we consider the current economic condition. To make a comparison, RM1 million is currently at around US$250,000.” This is the full article in EdgeProp.my  The reason to do is to ‘encourage’ the developers to focus on affordable homes instead. He said that the government wants them to focus on building houses for Malaysians. However, there was no timeline mentioned for the introduction of this new increase. Currently foreigners could only buy resiential properties above RM1 million except for those in Penang Island, Perlis, Melaka, Kedah and Sarawak.

Personally, the government must intervene in the market because availability of affordable homes will not just happen. Developers have an obligation to their owners, their shareholders to earn sufficient profits so that dividends could be given. Imagine building 1,000 units of affordable homes and trying to sell them versus building just 300 units of not-so-affordable homes and trying to sell them. The effort needed for both are very different. This is why the government must step in. For example, some subsidies, some tax incentives and perhaps even joint-ventures. However, increasing the floor price for foreigners? That will not do much in reality because RM1 million homes are really not something majority of Malaysians could afford. In fact, if we look at even the T20 group, seriously, most of these group would still not be able to afford that RM1 million home. Please focus on the necessary yeah. Happy buying.

written on 11 July 2018

Next suggested article:Manifesto on affordable homes for Malaysians. Let’s Do It 

 

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