Housing and Local Government Minister Zuraida Kamaruddin stated that the ban on luxury property developments is being reviewed and added that the moratorium might be lifted soon.
The consideration surfaced with the rising sentiment of “improving economy and signs that buyers are returning to the property sector.” She said that the country’s improving economy suggests that there is a need to remove the freeze, as reported by The Malaysian Reserve.
In an interview with the paper, the minister said that she will seek to lift the ban for some projects and for now, it will be done on an ad-hoc basis. “If I feel there is a need and urgency (to lift the ban), I have no choice but to bring the matter to the Cabinet and explain why it is important and to get their approval,” said the minister in the interview.
In November 2017, the government put a hiatus on luxury developments priced at more than RM1 million. The ban also involved shopping complexes, offices and serviced apartments in order to curb an increasing oversupply. The moratorium was implemented following a report released by Bank Negara Malaysia (BNM) in June last year where a worrying property glut was found in the sector.
Over-supply of luxury projects had been identified as the main source of the glut. According to National Property Information Centre (NAPIC), property overhang involving residential properties, serviced apartments and SOHO units worth RM22.67 billion in the first quarter of 2018. This involves 34,532 unsold and completed properties – a 40% hike from end of 2017, urging the government to take actions.
Most of the RM1 million units were developed in cities such as in Klang Valley, Penang and Johor. The government is also receiving requests from developers that insist for the ban to be lifted.
Property Advisor’s Data Check
Is it really the right time to lift the moratorium on luxury properties, though? We turned to Property Advisor and generated an analysis from past transactions on condominiums and service apartments in Kuala Lumpur to see how the market has been performing since the ban was imposed.
The research found that Kuala Lumpur’s condominiums and service apartments transaction volume drastically dropped from 599 transactions in 2017 Q4 to only 81 transactions in the next quarter, 2018 Q1 – a whopping 86% decrease. Meanwhile, the median rate per square feet stabilised at RM460/sq. ft. between both quarters.
Has the ban successfully reduced the glut after only 8 months? Though we do not know how many projects have been shelved following the ban, is it really the right time to allow more supply entering the market? Since project approvals fall under the jurisdiction of each local authority anyway, the effectiveness of the ban is still a question mark.
Disclaimer: Property Advisor’s data are acquired from National Property Information Centre (NAPIC). The data presented here is “AS IS” and correct at the time of writing, based on the data updated to us at this point of time.
📲Download Property Advisor mobile APP and Search your property actual transacted prices NOW!!
Sign up now and receive FREE CREDITS worth RM15. Use code: PAAPP15
Download For FREE: https://goo.gl/h8uLvV