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Gov’t To Double Price Of Houses That Foreigners Are Allowed To Purchase

May 11th, 2012 · No Comments

The Government is contemplating increasing the minimum floor prices of houses that foreigners are foreigners are permitted to buy to RM1mil from the present RM500, 000 in an attempt to direct the growth in property prices, sources said.

They claim that said  decision was “in the pipeline” and the execution would be made by the economic planning unit (EPU) under the Prime Minister’s Department at present headed by Minister Tan Sri Nor Mohamed Yakcop.

“From what I understand, these revised guidelines have been discussed at the ministerial level and should this be enforced, it will mean that foreigners will only be allowed to buy properties priced above RM1mil. For now, the base price is set at RM500,000 for foreigners. This base price is a bit low looking at present circumstances,” This was revealed by a reliable government source who asked for anonymity.

“The current trend in the property market indicates that prices are still continuing to climb despite measures by Bank Negara to curb property prices from spiralling out of control. We need to act before it goes further out of hand,” the Putrajaya source added.

One more source said the revised guidelines would also think a slightly lower base price threshold of RM800, 000 for residential properties in chosen economic corridors such as Johor’s Iskandar Malaysia to guarantee the development and triumph of these corridor hotspots.

“This base price will also be subject to reviews by the Government from time to time depending on the inflationary situation of the economy and to keep overall inflation in check,” the source said.

Deputy Finance Minister Datuk Donald Lim had recently told the press that the Government will adopt “strict measures” to steer clear of a US subprime mortgage financial crisis after average house prices had jump almost 7% in the fourth quarter of last year notwithstanding measures announced by Bank Negara to rein in property prices.

“The Government is worried about property prices causing a bubble and we don’t want banks to overlend to the property sector,” Lim said.

Industry sources surveyed by StarBiz said foreigners that tend to buy properties in Malaysia were those from South Korea, Japan, China and Singapore.

“This move will give an advantage to locals, especially those in the middle-income category as locals will not need to compete with foreigners. I am not surprised by this move, but our agency has so far seen mostly people from China and Singapore buying properties above RM1mil anyway,” a KL-based licensed real estate negotiator who did not want to be named said.

“However, we may see fewer transactions from the Koreans and Japanese. Westerners such as those from the United States and Europe won’t usually buy. They prefer to rent instead,” the real estate negotiator added.

Meanwhile, the execution of the higher floor price is estimated to have a minimal impact on the Malaysia property market as official information show that only 2.4% (worth RM1.45bil) of transactions conducted in the residential sector last year were worth RM1mil and more.

The Finance Ministry’s Valuation and Property Services Department Property Market Report 2011 released last week showed there were 269,789 residential property transactions worth RM61.83bil transacted last year, the highest recorded in the last five years.

“Both volume and value recorded double-digit growth of 18.9% and 22.1% respectively. The All House Price Index surged to 156.9 points in the fourth quarter (Q4) of 2011 against 147.2 points registered in Q4 2010,” the report said.

The report further reveals that landed housing was on a “general upward trend” in Malaysia and also accredited the increase in property prices to the Sungai Buloh-Kajang My Rapid Transit project.

“Across the board, terraced houses in KL recorded increases of 8%-13%. Increased prices of landed houses on Penang island were apparent. The highest transacted price of two- and three-storey detached (houses) were at RM2.05mil and RM5.15mil respectively,” the report said

 

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