Penang has announced a slew of measures to overcome the issue of overhang in the state's housing sector, including loosening requirements that limit sales of units to those residing in the state. 

According to state exco Jagdeep Singh Deo, non-Penangites will now be allowed to purchase between 20 to 40 percent of the units available on the market. 

"After building, we want to ensure accessibility of these units to buyers. 

"Due to eligibility issues and high loan rejection rate from banks, we learned that the problem is not supply, but accessibility of the units to buyers," he told a press conference today.

"Therefore, we want to tweak the market, to stimulate the sector to enable the units to be more accessible to buyers."

Jagdeep was quick to point out, however, that the overhang in the housing sector – referring to units that have been completed but remain unsold – is "under control."

He noted that among the most urbanised states in the country, Penang's rate of overhang has increased the least – from 2,000 to 3,000 unsold units – since 2017.

In comparison, Johor had a "staggering" increase of 9,000 unsold housing units in the same time period, he added.

Penang, he said, had exceeded its election manifesto target by building 100,000 affordable housing units.

Increasing eligibility

On the issue of the high rate of loan rejection from banks, Jagdeep said the issue is being addressed by the Finance Ministry. 

He also noted that Finance Minister Lim Guan Eng had earlier announced properties costing under RM1 million would be exempted from stamp duty in the first six months of 2019.

To further assist buyers, Jagdeep explained, the Penang government will increase eligibility by widening the household income requirement across the board. 

"In Penang, one of the main reasons for high loan rejection rate is the insufficiency of income per household. These applicants are considered risky buyers, ask any developer," he said.

The household income limit requirement to buy affordable units are RM6,000 monthly for a RM150,000 unit, RM8,000 for a RM200,000, and RM10,000 for a RM300,000 unit.

This has been revised to RM8,000 for a RM150,000 unit, RM10,000 for a RM200,000 unit, and RM12,000 for a RM300,000 unit.

"You cannot be a millionaire to buy affordable units. If you are too rich, you can buy other units (priced beyond RM300,000), that is simple logic."

Moratorium on approval fee

At the press conference, Jagdeep also announced that the one-month moratorium on the three percent approval fee for foreigners purchasing units in Penang will come into effect on Feb 1.

"The developers will report back to us after one month to see if this policy should be reviewed," he said.

The purchase cap of RM3 million for landed properties and RM1 million for high rise units on Penang island for foreign buyers remains unchanged.

On the mainland, foreigners are allowed to purchase landed properties at RM1 million, and high rise units at RM500,000.

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