KUALA LUMPUR: A veteran property expert says the Johor government should consider a moratorium on the approval of new housing projects and review this from time to time, amid concerns about a glut in residential properties.
For several years now, there have been concerns of an oversupply of properties in Johor’s up-and-coming Iskandar region, with Chinese developers coming to build homes in the area touted as “Malaysia’s Shenzen”.
In a recent Singapore Straits Times report, Iskandar Regional Development Authority (Irda) CEO Ismail Ibrahim said there were currently around 700,000 homes in the area and that by 2025, another 500,000 homes would be needed with the population in the region expected to hit three million.
Speaking to FMT, chartered surveyor Ernest Cheong said it was good that the Johor government had placed a freeze on serviced apartments since 2014.
“Even though the population is expected to grow to three million, it would be wise not to rush development.”
Cheong said properties which were being developed nowadays, especially in “hot areas” such as the Klang Valley, Penang and Iskandar, were going for prices beyond the reach of the average buyer despite falling property prices.
Some media reports have put the decline in property prices in Iskandar at 5%-10% for high-end condominiums and 20%-30% for landed properties.
Cheong said the dip in property prices would be close to the pattern in the Klang Valley and other urban centres where data from the Valuation and Property Services Department indicate that prices have dropped between 20% and 30% since 2015 and are continuing to fall.
“There is no doubt that a population increase would mean the need for more homes, but the question is, what kinds of homes? Are these homes people will be able to afford?
“But perhaps the more pertinent question is whether the economy in the state, and country for that matter, will grow as projected to enable the population to earn enough to afford these kinds of properties.”
He added that the current trend where many young people still stayed with their parents because of the high cost of living must also be kept in mind.
Cheong said the massive Forest City project which could house some 700,000 people should be enough to meet demand for housing for years, especially given China’s capital controls.
It was previously reported that some buyers of the mega-development project were seeking refunds as they could not raise money from banks in China following stricter capital flight control measures by Beijing.
Alan Ho, a former sales agent at Forest City developer Country Garden’s Malaysian operations, reportedly said then that about 90% of Forest City buyers were from China.
Cheong said with Chinese nationals facing capital controls, prices and rentals of properties in Forest City should go down.
“The state government should ensure there is no oversupply of properties. That’s what we want to avoid because if there is, it will lead to prices of properties and rentals going down dramatically and people losing money.
“So I believe it would be best if the Johor government puts a freeze on new properties and reviews the freeze from time to time and puts a restriction on what kinds of properties are developed, to ensure they are affordable.
“If the population grows and they need houses but can’t afford to buy or even rent them, then it would be a failure on the part of the authorities.”