Lowering the floor price for foreign property buyers will send the wrong signal to developers, said the National House Buyers Association (HBA).
In a statement, its secretary-general Chang Kim Loong said the proposal by the Johor government will instead incentivise real estate developers to target foreigners instead.
"This will inadvertently push housing developers in Johor to raise the price of properties in the range of RM400,000 to RM500,000 to beyond RM600,000 to capture this lucrative Singapore market and this will result in locals being squeezed out of the housing market in Johor.
"Is this what the Johor government wants? The duty of every government is to ensure that its citizens have access to affordable housing and not assist in foreigners buying properties at a much cheaper price compared to their home country," said Chang.
He said the state government should leave the marketing of unsold high-end properties in the state to real estate developers.
"HBA takes cognisance that there is a problem of unsold high-end properties but this problem was caused by the greed of the developers themselves who ignored the demand for affordable properties.
"Hence, it is the developers who must solve their self-inflicted problem. They will have to think of ways to off-load such properties such as offering discounts or other incentives to attract local buyers," he said.
Johor's floor price for foreign property buyers is currently RM1 million.
The state government is proposing to lower threshold to somewhere between RM600,000 to RM1 million, to deal with the glut in unsold properties.
The state has the highest number of unsold completed properties in the country, at 6,066 units as of May. The Johor government said most of the units are priced at RM500,000 upwards.