NGO blasts Penang's decision to lower property prices for foreign buyers

The Penang government's decision to ease pricing rules for the purchase of property by foreigners had raised the ire of a local NGO.

According to the Consumers’ Association of Penang (CAP), the government’s attempt to revive the real-estate sector, which has been adversely affected by the Covid-19 pandemic, was said to be a "bad decision".

CAP president Mohideen Abdul Kader urged the state government to refrain from trying to rescue developers who should have been prepared to face business risks.

"This would teach them a lesson not to be reckless and greedy for profit," Mohideen said in a statement, elaborating that, "the property overhang was the result of developers being 'overly optimistic' about the local property market."

He said it was obvious there was an oversupply of housing stock that outpaced the capacity of the market to absorb.

He also claimed there were 40 percent more new unsold residential units during the first half of 2017 as compared with the same period in 2016, and that the property overhang carried forward to 2018 and 2019.

Mohideen pointed out that according to the National Property Information Centre (Napic)’s statistics for 2019, Penang’s residential property overhang was the fourth highest in the country, standing at 3,353 after Johor, Perak, and Selangor.

From 2010 till the first half of 2019, a period of 9.5 years, only in 2012 was there a take-up rate of more than half (56.5 percent).

In 2016 and 2018, the take-up rates were less than 10 percent.

"The statistics of persistently high unsold units should have raised alarm and led to caution. This went unheeded with developers going on a ‘development’ spree, building expensive residential properties that most locals cannot afford," Mohideen said.

"Studies have shown that many completed but unsold residential properties are found in the higher-end category. These resources could have been diverted to provide housing needed by the B40 and the lower M40," he added.

Meanwhile, Mohideen said discounting properties for foreign buyers was not a good sales strategy because potential customers would devalue the product offered. He said with Malaysia’s low currency exchange rate, the properties were already a bargain for foreigners.

"Fire-sale is not the only reason why foreigners do not want to invest in properties here," Mohideen noted, adding that, "If we keep cutting our hills and polluting our environment, no amount of discounts will convince foreigners to buy properties here."

"They do not want to buy a sea-front condominium only to face either mudflats or another condominium years later," he said.

He added that instead of discounts for foreign homebuyers, it is the locals who should be given the priority of homeownership - especially in dire times like this when Malaysians faced difficulties getting housing loans.

Mohideen was referring to the price reduction for apartments that foreigners could buy from RM1 million to RM800,000 on the island and RM500,000 to RM400,000 on the mainland.

For landed properties, the minimum price is now RM1.8 million (previously RM3 million) on the island and RM750,000 (previously RM1 million) in Seberang Perai.

Meanwhile, Mohideen welcomed the Penang government lowering the prices of affordable homes by 10 percent.

"But, we are disappointed that the prices of low- and low-medium cost units remained unaffected which in fairness should also be discounted as they are purchased by those in the B40 group," Mohideen said. - Mkini