The Malaysian government has temporarily frozen approvals for luxury property developments to deal with the problem of staggering number of unsold residential properties in Malaysia. 

The announcement has come after the Bank Negara – the central bank of Malaysia – recently said the number of unsold residential properties was at a decade-high, with the majority of units costing above RM250,000 (US$ 60,328).

A news portal quoted Finance Minister II Johari Abdul Ghani as saying that development of condominiums valued above RM1 million (US$ 241,312), plus shopping malls and commercial complexes, was being stopped until the excess supply was cleared.

Johari said the government will encourage affordable homes, costing below RM300,000 (US$72,393).

The government, however, later clarified that it was not a blanket ban. Projects will be assessed on a case-by-case basis.

“The government is sending a message to developers to study whether there will be (sufficient demand for a project) before they decide (to proceed),”  works Minister Fadillah Yusof was quoted as saying.

“If you sell RM1 million (US$ 241,312) condos in (unattractive) areas, it may not attract buyers. But if you sell RM4 million (US$ 965,251) condominiums around the KLCC area, you will definitely get buyers, especially among expatriates.”

More than 130,000 high-end properties remained unsold in the first quarter of 2017.  80% per cent of new launches in the first quarter of this year were units priced above RM250,000 (US$ 60,328).

“Many projects of high-end properties have come up over the past 4-5 years, but since these properties are unaffordable, they have remained unsold,” the minister said.