Singaporeans more “wary” of Johor property oversupply

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KUALA LUMPUR (May 11): More Singaporean buyers are becoming “wary” of making property purchases in Johor due to oversupply concerns in the southern Malaysian state where transactions have slowed down, according to a Singapore minister.

“According to surveys by real estate agencies in Singapore, the number of Malaysian properties bought through these agencies dropped from 2,609 in 2013 to 838 in 2014,” said Lawrence Wong, Singapore’s Minister of Culture, Community and Youth on behalf of Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of the Monetary Authority of Singapore (MAS).

Citing data from Malaysia’s National Property Information Centre, Wong said there are 335,838 new private residential units in the pipeline in Johor – more than the total number of private homes in Singapore.

“The data does not include another 1,400ha of reclaimed land near Tuas Second Link that will come on-stream from 2020,” he said in the Singapore parliament today.

“In Iskandar Malaysia and Johor, some reports have highlighted aggressive land-banking by developers. There is indeed a real concern about the future over-supply in the property market there, and hence the potential decline in value of homes,” he said, pointing out that the value of residential property transactions in Johor have fallen by 42% in the fourth quarter of 2014 from a year-ago period.

Nonetheless, as “not all Singaporeans recognise the risks involved in overseas property purchases”, Wong said the MAS and the Council of Estate Agents (CEA) “will continue to step up efforts in raising awareness and highlighting these risks”.

As loans taken for foreign property purchases only make up 2% of housing loan portfolios of key mortgage lenders in Singapore, Wong said these loans do not constitute as a systemic risk to the city state’s financial institutions where MAS stress tests on the banks’ housing loan portfolios will remain sound even under stressed conditions.