Malaysia's property market shows signs of picking up as developers build less

Kuala Lumpur

MALAYSIA'S property paradox may be coming to an end as developers build fewer homes. The government rolled out a slew of measures in the past year aimed at solving the nation's two-fold problem of a lack of affordable homes and a RM19.8 billion (S$6.46 billion) property glut.

Signs are emerging it is working with official data showing that the number of completed units fell by one-third in the first half compared to the same period last year, while new projects slid by a fifth.

Developers constructed too many high-priced condominiums just as Malaysians needed cheaper homes. To address that, the government pushed the companies to offer discounts.

Finance Minister Lim Guan Eng also announced incentives for home buyers last week in his Budget 2020 statement, including support for rent-to-own programmes and state guarantees to lower mortgage rates.

"The market will level up in the next two years," said Soam Heng Choon, the president at the Real Estate and Housing Developers' Association.

The number of available units has dropped due to the "self-discipline" of developers and the sales campaigns, he said.

Homes worth RM19.8 billion remained unsold in the first six months, a 0.5 per cent drop from a year earlier, while transaction value has rebounded, rising 9.5 per cent.

Home prices remain muted, with the average cost of a house easing in the second quarter to RM420,345, the lowest level in a year.

Malaysia's real estate glut should also be helped as foreign buyers get more access. The minimum price that overseas investors must spend on available property will be lowered to RM600,000, from RM1 million from next year. BLOOMBERG