This follows BNM report expressing concern over large overhang of properties.
The news portal quoted Finance Minister II Johari Abdul Ghani as saying the cabinet decided this after scrutinising the BNM report on the real estate glut.
“The Bank Negara report takes into account high-rise condominiums, shopping malls and commercial units, including those that are valued at more than RM1 million,” he said.
He said the directive temporarily stops development of shopping malls, commercial complexes and condominiums valued above RM1 million until the excess supply is cleared.
Johari said the government will encourage affordable homes, costing below RM300,000 each.
He said there was 48% demand for affordable homes but the supply only met 28%.
Under the 2018 Budget, Prime Minister Najib Razak allocated RM2.2 billion to build 248,000 more affordable homes.
BNM, in a report on Friday, said the glut could worsen if the current supply-demand conditions persisted.
It said Johor is poised to have the highest number of unsold residential properties and potentially the largest excess supply of retail space.
“As such, it is timely for all parties to act now to mitigate any potential risks to macroeconomic and financial stability,” it added.
The issue made the headlines recently with Deputy Finance Minister Lee Chee Leong saying that the number of completed residential units which have not been sold rose by 40% to 20,807 units in the first half of 2017 compared with the same period last year.
“Condominiums and apartments costing over RM500,000 dominate the unsold homes in Malaysia,” he said, adding that the units were worth RM12.26 billion.
In its statement on Friday, BNM projected that one in three offices will be vacant by 2021 in the country and sees 140 new malls entering the market by that year.
Also on Friday, BNM governor Muhammad Ibrahim said imbalances in the property market posed significant risks to the overall economy in the event of a shock.
He said Malaysia had record high unsold residential properties of about 130,690 units until the first quarter this year, mainly for houses priced above RM250,000.
He also said the vacancy rate for office space is expected to be at 32% in 2021.
With about 140 malls entering the market in key states by 2021, he said this would exacerbate the oversupply potentially becoming more severe than during the 1997 Asian Financial Crisis.
BNM, in its report, said this is a source of concern as the property sector has linkages to more than 120 industries, collectively employing 1.4 million Malaysians.
Housing loan approval rate stood above 70%, while the rejection rate remained below a four-year average at 23.3%.
In the first nine months of this year, RM121.6 billion of new housing loans were approved by banks, benefiting close to 300,000 borrowers.
Of this, 60% were channelled for the purchase of houses priced below RM500,000.
Bank Negara: Property glut highest level in a decade
BNM: Property market imbalances pose risks to economy
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