Minister: Stop pre-launch property sales to curb speculators

A view of condominiums near Subang, near LDP. A condo costs RM500,000 on average in the Klang Valley. — Picture by Saw Siow Feng
A view of condominiums near Subang, near LDP. A condo costs RM500,000 on average in the Klang Valley. — Picture by Saw Siow Feng

KUALA LUMPUR, Jan 21 – Pre-launch sales are driving speculation behind local property prices and should be discontinued, Minister Datuk Seri Abdul Wahid Omar told developers today.

According to the minister in the Prime Minister’s Department, the activity draws greater participation from property investors than genuine buyers.

“My suggestion would be for developers, Rehda, to call upon their members to eliminate these pre-launch sales,” he said here, referring to the Real Estate and Housing Developers’ Association.

The minister in charge of financial affairs made the remark during a book launch by property debt refinancer Cagamas Holdings Bhd.

Despite the call, Abdul Wahid denied that Putrajaya “over-regulates” or applies pressure on the industry.

“I don’t think we want to over-regulate so much, so we’re asking the developers to come up with their own set of regulations,” he told reporters later.

When asked for his response, Rehda president Datuk Seri Michael Yam said that Putrajaya still needs to provide some guidelines as such sales are in a grey area.

“The issue then is, does it fall foul of the law? If it is (about) trying to get registration, trying to gauge response to the project, then maybe we should accommodate (it),” Yam told reporters.

He added that such sales strategies were needed to cut down on the risk of abandoned projects, saying it allowed developers to more accurately determine market demand.

Yam explained that most developers also would not want to sell several units to just one party, since they would lose money to offer discounts and that the move would limit new customers from entering the market.

Malaysians have complained of spiralling property prices that are putting the homes beyond the reach of average wage earners.

In Budget 2014 tabled last year, Putrajaya announced measures to curb speculators and prevent rapidly increasing prices, including a hike in the real property gains tax (RPGT).

The tax was doubled to 30 per cent for properties disposed within three years of acquisition, 20 per cent within the fourth year, and 15 per cent on the fifth year.

Putrajaya also did away with the Developers Interest Bearing Scheme (DIBS) in which the developer pays the interest payments for the buyers’ loans during the construction of a property, which was seen as an incentive for speculation.

The minimum price of property that may be purchased by foreigners was also doubled by Putrajaya from RM500,000 to RM1 million. 

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