The Finance Minister announced during the recent National Budget 2020 that the government is lowering the threshold on high rise property prices to RM600,000 from RM1 million for a year. This is to enable foreign ownership of condominium and apartments in urban areas to reduce the existing overhang of these properties that amounted to RM8.3 billion in the second quarter of 2019.
As such we wish to state that the Consumers’ Association of Penang (CAP) is right about a fire sale of our housing properties to foreigners. The luxurious condominiums and apartments should not have been built in the first place, neglecting the need of cheap and affordable homes. Moreover, an influx of big spenders would cause an inflation in prices of goods as well.
Lowering threshold to help developers may encourage them to become reckless, giving little thought as what will happen when there are no buyers because the government will help them out by bringing in foreign buyers. In fact, the government’s priority should be for housing the lower income group and developers are not keen in producing affordable housing. Over building of luxurious housing encourages property speculation and inflates the prices of land which also affect the affordable housing sector.
Can Malaysia My Second Home (MM2H) programme unwittingly enable some MM2H applicants to launder their money, particularly from offshore accounts, in the form of property investment in Malaysia? The government has to be cautious about this possibility.
Another point of concern is that they are allowed to take housing loan from local banks with a Margin of Finance ranging between 70 to 80%. The question we would like to pose is: Why should our banks finance foreigners to purchase property with money deposits from Malaysians?
We urge the government to maintain or increase the RM1 million threshold for the purchase of properties by foreigners as our weak Ringgit is already lucrative to them. In this case the developers had overproduced luxurious housing units even though there were already signs of a softening market as early as 2017. The developers should not be bailed out. Why should the government show favour to the developers?
Press Statement, 16 October 2019