Malaysian Property Remains Attractive

Property in Malaysia has long been attractive in Southeast Asia, remaining affordable despite the price escalations in neighbouring Singapore.

Iskandar Malaysia, Kota Kinabalu, Kuala Lumpur and Penang are expected to continue being in demand for foreign buyers, following the recent tightening measures taken by the Hong Kong and Singapore governments to “cool” their overheated property sectors.

A survey carried out by iProperty showed that Malaysia is a preferred destination for Singaporean buyers.

In the survey conducted among 2,099 Singaporeans, 42 per cent chose Malaysia as the number one destination for buying property, followed by Australia and the United Kingdom.

On whether this may drive up property prices here, Malaysia Property Incorporated (MPI) pointed out that Malaysia was not a speculative market.

“Looking at our historical house price index, we can see that we have had steady appreciation in prices over the years with no peaks or troughs, unlike the more speculative markets of Singapore, Hong Kong or Shanghai which experience acute fluctuations during the recent economic crisis,” MPI said.

“Internally, Malaysia has also improved in the Doing Business 2013 report which would boost investors’ confidence in the country’s growth so this could help in attracting more foreign direct investment into the country and possibly translate into some property purchases,” it noted.

According to Smart Investors Club co-founder Jeffery Lam, our property market is still one of the most affordable in Southeast Asia and it still has a large potential to grow.

“Malaysia will definitely be one of the shining stars in the region and this is surely a good sign for the country’s economy,” he said.

The only challenge facing the property market is the sharp rise in property prices in Penang after Chief Minister Lim Guan Eng came to power in 2008.

Single-storey terrace houses with three rooms that earlier used to cost between RM200,000 and RM300,000 are now quoting between RM450,000 and RM650,000.

A landed property in Air Itam that was priced at RM300,000 before the 2008 election, was reportedly sold for RM1 million recently.

Member of Parliament Tan Tee Beng recently blamed these inflated prices on the DAP-led state government’s policies.

He said the main reason was the three-fold increase in the developer contribution for not building low-medium cost (LMC) units and in development charges for increasing build-up plot ratio.

Under the state’s urban housing policy, a developer pays contributions to the local government for not building the pre-conditioned 30 per cent units of LMCs in a housing development scheme.

Tan pointed out that the LMC contribution charge had tripled from RM40,000 per unit under Barisan Nasional to RM120,000 per unit under Pakatan Rakyat.

As a result, a developer has to now fork out RM3.6 million per 100 residential units if it chooses to not construct the 30 required LMCs.

“All these increased rates surely hike up development cost by three folds.

“To absorb this extra cost, the developer will add on to his sale price together with other charges as well.

“The burden falls on the consumers,” Tan said.

As a result of exorbitant prices, most middle class families and young couples find they cannot own a home on Penang Island. This is not just limited to low-cost homes, but also covers medium-cost residential homes.

Guan Eng has naturally faced a lot of flak recently for the acute lack of affordable housing in his state. According to the Auditor-General’s Report 2010, not a single low-cost house was built by the DAP-led state government from 2008 to 2010.

Prime Minister Datuk Seri Najib Razak highlighted this problem during his landmark visit to Penang in December, when he announced a federal programme to build 20,000 affordable housing units in the Pakatan-ruled state.

The federal government has also supported first-time buyers across the country with its “My First House” scheme. It allows young working adults to obtain 100 per cent financing from banking institutions to purchase their first home.

Applicants can receive a maximum of RM220,000 for single applicants, or a maximum of RM400,000 for a joint application by a couple with a combined income of less than RM6,000 per month.

Once again, under Najib’s leadership, BN has shown that effective policies can make a huge difference in people’s lives.

While Guan Eng has thrown up his hands over the housing problem in Penang, the federal government continues to implement policies that benefit the rakyat while ensuring that our property market remains attractive to overseas investors. This will ensure a stable environment for both end-users and investors.