The government announced that effective November 1, all luxury property projects will be frozen. What does it mean to the rakyat? How will it benefit them? Let’s take a look.
The property market situation in Malaysia right now
According to a Bank Negara Malaysia report on, there is an oversupply of high end residences.
Most of the property are priced at RM250,000 and above, of which half are apartments.
There are also plans to build 140 new shopping malls which is more than enough.
Due to the oversupply situation, the government has frozen the construction of new luxury projects.
This is timely because if nothing is done, our economy will be affected just like in the 1997/1998 Asian economic crisis.
Government want developers to build more affordable homes for the rakyat
Part of the reason why there is an oversupply of luxury homes is because developers are not building enough affordable homes.
National Housebuyers Association secretary Chang Kim Loong said currently there is a shortage in affordable homes as developers build more and more luxury homes.
Second Finance Minister Datuk Seri Abdul Johari Ghani said on November 19 that the government does not want developers to build so many luxury homes but so little affordable homes.
So the freeze is timely to address the matter.
Developers don’t understand what the rakyat wants and can afford
There is currently huge demand for houses priced between RM200,000 and RM300,000.
But the Real Estate Housing Developers Association think that there is big demand for houses which cost more than RM500,000.
Is that really the case?
So there is a huge mismatch here between Rehda and the situation on the ground.
It is time that the property players face reality and see what the rakyat really wants before it gets worse.
Not enough 1PRIMA houses
Under Budget 2018, a total of 210,000 units of 1Malaysia People’s Housing Programme (1PRIMA) priced below RM250,000 will be built.
Datuk Seri Johari said however, the demand by the rakyat is twice bigger than what 1PRIMA can supply.
So it is clear that the developers must do something to help with the property situation.
Protect the economy
If developers are allowed to build so many houses, the oversupply situation will get worse.
Bank Negara said there are 130,690 units unsold, of which 61 percent are apartments.
When there is an oversupply, the developers cannot sell their property projects.
When the developers cannot sell, the developers cannot repay their loans to the banks.
When the developers cannot repay their loans, the country’s economy will be affected.
The houses cannot be sold and the suppliers will not get paid.
The economy will then suffer.
Before that happens, it is better to act now rather than later.
Affordable houses, sells very fast
Anywhere you go in the country, it is the affordable homes which sells like hot cakes.
Houses priced at below RM300,000 will sell very fast compared to houses priced at above RM500,000.
This is because 40 percent of the population belong in the M40 group, or middle income earners.
Houses priced at above RM500,000 do not move that much.
So that is why the government is helping to build more affordable homes in the country.
Affordable homes drive the economy.
Developers must clear the unsold houses
Housing developers must accept responsibility and clear the oversupply of medium to high end property.
In his weekly column, New Straits Times group managing editor Datuk Abdul Jalil Hamid said the developers must bite the bullet and sell their property at a lesser price.
They can offer various discounts as it is better for developers to make lesser profits than make a loss.
Or developers can rent out the property and give the rakyat the option to buy later.
Set up one agency to manage affordable housing soon
Bank Negara Malaysia had proposed the setting up of a single integrated agency to manage affordable housing.
This initiative must be speeded up soon.
This is because at this time, there are so many agencies handling affordable housing.
This include state governments, local councils, government agencies and 1PRIMA.
It is time for all the agencies to be streamlined into one to ensure comfortable and affordable homes for the rakyat.
Property sector will recover
In time, the property sector will recover as the freeze is temporary.
Kenanga Research said the freeze will alleviate the oversupply situation.
After a few months, the situation will get better and the sector will continue to perform.
What does this mean to the rakyat?
The move by the government to freeze luxury projects will have a positive impact on the rakyat.
Firstly, the developers will need to rethink on their strategies and emphasise on affordable housing.
When developers build more affordable housing, the rakyat’s welfare will be looked after.
Secondly, the freeze will prevent a major economic crisis.
When there is no economic crisis, the rakyat will be able to earn a living and support their families.