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Malaysia's property market to pick 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 US$4.7 billion property glut. Signs are emerging it's working with official data showing 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 in the 2020 state budget, including support for rent-to-own programs and state guarantees to lower mortgage rates.
"The market will level up in the next two years," said Soam Heng Choon, 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 (S$6.5 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.