Prime Minister Tun Dr Mahathir Mohamad speaks during a press conference at the Malaysia International Trade and Exhibition Centre in Kuala Lumpur October 15, 2019. — Picture by Hari Anggara

KUALA LUMPUR, Oct 15 — The government lowered the price threshold for foreign house buyers in an urgent move to prevent the current property overhang from ballooning into a crisis, Tun Dr Mahathir explained today.

The prime minister said he was previously critical of such measures being implemented in the Forest City project in Johor where properties were said to be freehold and high-end to protect domestic home buyers.

“Forest City was quite different... the property was freehold and luxurious... only foreigners can afford to buy.

“This is not for foreigners who can afford to buy,” he said, referring to the recent announcement that foreigners can now buy high-rise houses in Malaysia at the lowered price of RM600,000 instead of the previous minimum set at RM1 million.

“Obviously there are people who are not so rich and they want to have a flat here and they can buy cheaper flats and apartments,” he told reporters at the launch of Malaysia Medical Device Expo 2019 (MYMEDEX) and International Medical Device Conference 2019 (IMDC) held at MITEC this morning.

Dr Mahathir said the property overhang could result in a financial crisis, pointing to Hong Kong and Tokyo which were attributed to overdevelopment of their cities.

“Property overhang can result in crisis so we have to get rid of this overhang so that the market for property becomes healthy again.

“We need to sell them or the developers will get into trouble,” he added.

The government’s move to lower the threshold was announced during the tabling of Budget 2020 in Parliament last Friday and drew mixed responses.

Finance Minister Lim Guan Eng who tabled the budget has said the measure was necessary to cut the oversupply of condominiums and apartments amounting to RM8.3 billion in the second quarter of 2019.

Lim said the move was to encourage the sales of properties from developers and would not affect the secondary housing market.

But critics have claimed that housing developers might take advantage of the situation by engaging in high-rise property speculation in order to jack up prices.