Malaysia’s government tries to dampen property speculation

Property speculation is still soaring in Malaysia and the government is taking steps to counteract it. Here, Triona Chelliah, Malaysia specialist at relocation network, Reloc8 gives an analysis of the current situation.

Khalzuri Yazid via Wikimedia Commons

Property speculation is still soaring in Malaysia and the government is taking steps to counteract it. Here, Triona Chelliah, Malaysia specialist at relocation network, Reloc8 gives an analysis of the current situation.General Trends in the Housing marketKuala Lumpur
Sale prices in KLCC area of Kuala Lumpur have increased tremendously resulting in higher rental prices. Prices in other areas are stabilizing.Penang
Property prices have increased due to expensive land cost as well as increased material and inflation costs. For example: Setia V Residence at Gurney Drive and Andaman at Straits Quay, are selling at RM 1,400 per sq ft, compared with Gurney Paragon and Straits Quay which were selling at RM 900 per sq ft in 2011/2013. Normally the landlord&#x;s target will be at least 4 per cent rental return on the investment.The increase is similar across the market except for some rural areas only.Availability (and supply) of expat standard housingKuala Lumpur
Due to higher construction prices, developers are now building smaller apartments (typically 600&#x;2000 sq ft).Penang
Owners who have owned their property since construction are typically comfortable maintaining the current rental rate. On the other hand, some owners will not mind lowering their 4 per cent return to compete against others and to avoid having empty premises, but these are a handful of owners only. On the other hand, those owners who are struggling with loan repayments may lower their intended rental to capture some revenue.Policies or regulations that affect rental or purchase practicesKuala Lumpur
Malaysia is trying to curb property speculation by raising Real Property Gains Tax to 30 per cent for first three years of purchase and the minimum price for foreign purchase has been increased to Ringgit Malaysia (MYR) 1 million.Penang
Besides the government&#x;s new scale for Real Property Gains Tax, Penang State Authority has imposed new rulings on land port ratio, in an attempt to control apartment and condominium density.A levy of 2 per cent for Malaysian and 3 per cent for foreigners on all property transacted, came into effect on 1st Feb 2014 &#x; its main intention to reduce speculation.&#x;For further advice please go to Reloc8 at: reloca8asia.com