Conference launched: (from left) Mier director Prof Emeritus Zakariah Abdul Rashid, Johari, board of trustees members Tan Sri Prof Emeritus Anuwar Ali and Datuk Hamzah Bakar at the launch of the National Economic Outlook conference.

KUALA LUMPUR: Second Finance Minister Datuk Seri Johari Abdul Ghani has reaffirmed the freeze on the development of future high-rise luxury residential projects with units costing more than RM1mil.

He said that effective Nov 1, high-rise luxury residential projects with units costing above RM1mil, offices and shopping malls would not be approved and it was a ruling applicable to the entire country.

“There is no U-turn on the decision. It is something that has already been decided by the Cabinet taking cognisant of Bank Negara’s study on the mismatch of housing demand and supply,” he told reporters at the National Economic Outlook conference 2018-2019 organised by the Malaysian Institute of Economic Research yesterday.

He said all projects that had already been approved and ongoing projects would not be affected by the decision.

Last Friday, Bank Negara came out with a report on the critical mismatch between supply and demand in the housing sector.

The central bank said there was a huge amount of serviced apartments, small office/home office, retail and office space that were coming onstream in the next four years.

It said that these units were over-priced and did not meet the requirements of affordable housing that was in demand.

On Saturday, Johari announced that the Cabinet had frozen development on all luxury development projects to address the mismatch in the supply of houses.

However, on Monday, Works Minister Datuk Seri Fadillah Yusof was reported to have said that it was not a complete ban, prompting reports that the government was making a U-turn on the matter.

Meanwhile, Johari said a rationale for the measure is to ensure the health of the banking sector.

“If we don’t regulate or control this situation based on Bank Negara’s advice, it could affect our banking sector.

“Because these projects will go to the banks to get financing. Imagine if you get the financing but then you can’t sell them. The bank will face problems such as non-performing loans,” he said.

“So far, the banking sector is still good,” he added.

Johari said there was no timeline on the measure and the government would “look at the situation”.

He said there was a huge mismatch in the property market, of which the demand for affordable homes is 45%, while the supply is about 25%.

“Those people who build RM1mil and below please proceed. We want to make sure that the gap in the market can be filled,” he said.