PROPERTY NEWS: No bubble, prices not foreign-driven
BUBBLE?: With climbing property prices continuing to strike a nerve with the general public, there is a sentiment developing that the country might be headed towards a property bubble and that this is largely due to foreign property investors. Not so, according to Datuk Seri Michael Yam, President of Real Estate and Housing Developers’ Association (REHDA) during a media property update recently.
“Despite what the manonthe street might think, we feel that the property bubble is only a myth. Foreign investors account for only 2 per cent of total properties transacted last year. They are very selective with their investment locations and there are only a few property hotspots, mainly in Kuala Lumpur and Penang city centres. Unfortunately, things are being blown out of proportion and treated as a nationwide phenomenon. Subsequently, legislations are being implemented affecting the majority 98 per cent of the industry which is not related to this relatively small market,” explained Michael. He further explained that foreigners can only purchase properties above RM500,000 and in the last eight years there has been little price appreciation of properties in that price range.
“Factors contributing to increase in property prices have very little to do with foreigners. For example, prices for properties above RM500,000 depreciated by 3.16 per cent between 2004 and 2011,” said Veena Loh, General Manager of Malaysia Property Incorporated (MPI). “It is very much supply-driven and demand-led, including factors such as shortage of prime land, rising material cost and are mostly driven by local demand, where the highest appreciation is seen in Sabah where strong commodity prices have boosted profits and incomes leading to higher investments in property.”
During the media update, national council members of REHDA also expressed their concerns about the Build Then Sell (BTS) concept which the government aims to make mandatory by 2015 and if not planned for properly could possibly lead to further housing shortages and drive market prices up even higher.