Current State of Malaysia Property Market

Farah Waheda Wahid

Over the recent years, property prices in Malaysia have appreciated dramatically between 20%-100% beyond the affordability of most people, giving rise to much discontent in the last few years especially in the state of Kuala Lumpur, Penang and JB. Low-interest rates, high liquidity, high labor costs as well as compliance costs and inflation which lead to rising in building material costs are some of the major elements that contribute to this surge in prices.
Investing in real estate is a big decision as it is probably one of the biggest financial moves in life. It requires careful thinking and thorough research especially if you want to earn from the property. There are several ways to earn through real estate. One is to by reselling the property in the future with a bigger value, or you can choose to rent it out just in case you are not using the property. In any case, the key to getting a good income in real estate is LOCATION.
man holding a house
Even though Malaysia is slated with the escalating of property prices, Malaysia property is still an excellent choice for many reasons – economic and entertainment. Properties in Malaysia are on the steady rise when it comes to value because of the many reasons, and one of them is a strategic location. It's proximity to many tourist and business destinations like Australia, Singapore and Bali lure investors. This is aside from the fact that Malaysia itself is rated as the best place to retire in South East Asia because of the beauty of the place.
Malaysia property is a good investment as it has a property growth ranging from 15% to 30% annually. One of the reasons behind this is the outpouring of economic activities in the country. The number of rising expatriate community is growing which created a high demand for quality residential and commercial properties. Also, the government of Malaysia had made incentives for foreign investors in the country. Included in the incentives are tax breaks as well as some relaxation of laws regarding ownership of properties by a foreign investor.
It is a fact that the local appetite for properties for sale in Malaysia has been doing well in the past couple of years especially with the Malaysian Government intervention has taken place recently. Malaysia Government is trying to 'calm' the local property market and prevent the property prices from rising further by introducing several 'cooling' measures.
Under the Central Bank's new lending guidelines that took effect on 1 January 2012, loans are now approved based on net income rather than gross income. With that, slower loan growth for banks is expected in 2016 as predicted by the Malaysian Investment Bank Research. This trend is said to be an indicative of the residential property market cooling following tightening measures by Central Bank. However, it is not rational to conclude that the demand for local property has been decreased based solely on this single data as the loan volume might actually remain relatively constant; this is probably just a state where people have to go through more banks to get one loan approved.
If you are looking for more than just obtaining a property as rental property, you should pay attention with the current real property gain tax (RPGT). If you are selling your properties within 3 years from the date of acquisition, you are required to pay 30% of tax of the profit. This is definitely an effort to contain the issue of rising properties for sale to curb with the excessive property market speculation. On top of that, the 30% through 5 years of acquisition imposed on non-citizen will definitely deter extreme speculation from foreign investors.
It is in general belief that property prices in Malaysia will continue to rise but at a slower pace. The local buyers see homes as hedge against inflation and have no other options in alternative investments and on top of that, more developers are looking into providing affordable homes to the public and all these factors give a green light of investing in properties in Malaysia.

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  1. Appreciated way beyond 20-100%, it's more than 300% in some prominent states.

  2. It took me a little longer in finding good dove mountain real estate than the management company originally stated but they finally found me one.

  3. My predictions is that the millenial demographics will actually popularize rental practice which will marginalize property owners who wish to sell their properties making it a better option to rent out. This is actually the reason why my team and myself developed patform for easy room renting.

    I was wondering about your opinion on this matter. Do you think these and upcoming generations will drastically change the real estate industry?


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