PETALING JAYA: The four-unit limit ruling on bulk property purchases has not made any impact on the residential property market and could be detrimental to the investment market, said the Malaysian Institute of Estate Agents (MIEA) president Siva Shanker. "The ruling does not work with group sales because in group sales, each person buys one unit. The ministry has got it all wrong. Group buying and bulk buying are different. Bulk purchasers are actual investors who have capital and buy several units for investment whereas group purchasers are a group of say, 200 individuals who buy one unit each for the purpose of flipping the units," he told SunBiz in an interview. He said the ruling was the wrong policy in the first place and was not thought through properly prior to implementation. It also punishes genuine investors instead of addressing the issue of runaway prices caused by speculative buying. The limit on bulk purchase was first mentioned in February when Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said that the government is considering ways to restrict bulk buying of properties by investor clubs. As part of an effort to curb speculative buying of properties by investor clubs, which is one of the causes of runaway prices of properties in the Klang Valley, Abdul Rahman said developers who intend to sell more than four units to a purchaser must obtain prior approval from the Controller of Housing. "In my opinion, there should be an outright ban on investor clubs, or the clubs should be regulated. But an outright ban is better," said Shanker. According to him, the market has slowed down considerably with developers' sales falling 50% so far this year. In Sabah, the Sabah Housing and Real Estate Developers Association (Shareda) announced a 65% drop in sales. "The romance has left the group buying clubs because it only works in a rising market…the lure of group purchase is not so much there anymore," he said. However, he said this is not the result of the ruling on bulk buying as none of the developers have registered or submitted names of purchasers to the Controller of Housing for bulk buying. "I don't blame them because there has been no official document from the ministry since the announcement," he said. Shanker said the drop in property sales in the first half of the year was due to the general perception of a slow down in the economy. "The outlook on the property market is still gloomy. In the first half, transactions fell but values are staying or going up…between 2011 and 2013, the market rose too high, too fast and too quickly. Now the market is screeching to a halt," he said. He said talk of a property bubble, property prices rising and responsible lending guidelines have created a negative market perception, which has slowed down the market but values are still "grossly inflated". "The market is in a tailspin and it has yet to recover. The slow down will reduce in the second half of this year and remain flattish next year before picking up again in 2016." National House Buyers Association (HBA) secretary-general Chang Kim Loong concurs, adding that the ruling, which was implemented in May, has not resulted in any improvements in the residential property market. "Our members have not reported any improvement in the situation at all," he told SunBiz. According to Chang, the ministry has not issued any official circular to industry players and stakeholders despite various reports on the new ruling published in the media. "The ruling also states that each buyer is allowed to buy up to four properties per development. This means that speculative buyers can still use their relatives' names to buy more than four residential properties. There are too many loopholes with this ruling," he said. He reiterated his opinion that investor clubs should be outlawed and there should be regulation on the formation of such clubs. He also urged the government to investigate developers "who are speculators themselves". "Some developers set up their own companies and buy the properties themselves, after which they claim that the project has been sold out," he said, adding that prices rise considerably in the secondary market after that. "Is it in the public interest to commodify a common need?" he questioned.