ISKANDAR PUTERI – The problem of residential property overhang in Johor is so heavy that even improving the terms of the Malaysia My Second Home (MM2H) programme may not solve the situation.
Among the reasons for this, said a property expert, is a condition imposed on foreign house buyers, including those with MM2H status, that limits their purchases to properties worth a minimum of RM1 million each.
“Although it may vary in different states, this is the condition set in Johor,” said the expert who spoke to The Vibes on condition of anonymity.
Even then, it still would not solve the issue as properties worth that price only contribute to 10% of the unsold properties we have in the state.”
“However, many of the unsold properties in the state are in the range of RM500,000 onwards, and they include those in the Bumiputera quota.”
It is reported that a unit becomes listed as an “overhang” property if it has received its certificate of completion and compliance, but remains unsold for more than nine months after launch.
Recently, the Johor government announced that it will propose to the federal ministry in charge of housing to review the MM2H programme as part of efforts to overcome residential overhang in the state.
State Housing and Local Government executive councillor Datuk Mohd Jafni Md Shukor had said the review should solve many issues of residential overhang involving luxury houses costing more than RM500,000, which have remained unsold since two or three years ago.
“These houses can be offered for sale to buyers outside Malaysia,” he had told reporters on December 5.
It is understood that the housing sector would now be under the purview of the Local Government Development Ministry, under minister Nga Kor Ming in Prime Minister Datuk Seri Anwar Ibrahim’s new government.
The expert pointed out that even if MM2H is revived, the programme to give residential rights in Malaysia to foreigners who fulfil the relevant payment and terms would not be exclusive to the state of Johor.
He noted that potential buyers have choices scattered across the country.
“I wouldn’t say the programme would solve the issue we are facing now,” he said.
Speculators played up Johor hype
The expert added that Johoreans’ preference for landed properties also contributed to the massive volume of unsold high-end apartment units recorded in the state.
As it stands, Johor has the most overhang residential units in the country, with 6,000 units worth a total of RM4.7 billion yet to be sold.
The MM2H programme was suspended in 2020 for a review of terms and was revived last year.
The higher thresholds for applicants now include having RM1.5 million in liquid assets, RM40,000 in monthly offshore income, and RM1 million in a Malaysia fixed deposit account.
Johor Menteri Besar Datuk Onn Hafiz Ghazi told the state assembly earlier this week that the state would work together with Putrajaya to study the implementation of MM2H in Johor, as a means to deal with the property overhang issue.
However, property experts here stressed that speculators who hyped up Johor Baru as an up-and-coming international city about 10 years ago also contributed to the current predicament.
“The developers then rushed to build these high-end apartments to cater to these supposed international buyers. But the supposed speculation didn’t really hit off and the result is what we are seeing today.
“The supply didn’t match the demands of Johoreans who still prefer landed houses to living in high-rise buildings.”
Onn Hafiz stressed that even if they are open to buying an apartment, they would be hard-pressed to find any costing less than RM200,000.
“That’s why you see new affordable projects in the range of RM300,000 also finding it difficult to attract buyers, especially in the Bumiputera quota,” he said.
He added that low household income also contributed to the problem, as potential buyers are denied housing mortgages by the banks. – The Vibes, December 23, 2022
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