Concerns over floor price hike for residential properties

PETALING JAYA: Some property consultants are not in favour of a potential move to increase the floor price of residential property for foreign buyers from RM500,000 to RM1mil.

They said such a move would not affect the increasing prices of ordinary homes, and might deter foreigners from investing or working in Malaysia.

Property consultancy Rahim & Co executive chairman Datuk Abdul Rahim Rahman said Malaysia needed foreigners to be part of its work force as the country progresses to become a high-income nation by 2020.

“Such a move would reduce the number of residential property purchases by foreigners. Personally, I do not think that foreign purchases have contributed very much to the rise in prices of ordinary homes although it did affect the prices of luxury homes or apartments in the KLCC area, initially,” he said on the sidelines of the 22nd National Real Estate Convention.

The convention is jointly organised by the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) and The Royal Institution of Surveyors Malaysia.

PEPS president Choy Yue Kwong was of the opinion that even at the present RM500,000 floor price, many foreign residents did not find it easy to buy homes. “The focus seemed to be on the upper-income bracket (foreign residents). But people forget that many foreigners are just ordinary professionals and workers.”

The 2011 property market report, compiled by the Finance Ministry’s Valuation and Property Services Department, had noted that the demand for units priced above RM500,000 had increased nationwide, with 21,905 transactions last year (compared with 16,782 in 2010). “This could be attributed to the increase in affordability level and supported by the ease in borrowing as well as attractive loan packages offered by the financial institutions,” it said.

On residential property values, Abdul Rahim said overall prices should stabilise this year due to credit-tightening measures by banks.

HwangDBS Vickers Research said there would be minimal impact to the property sector from the potential move, as “foreigners usually buy high-end properties (Johor is more vulnerable, given its lower property prices and higher dependence on Singaporeans).”

The research unit noted in a report that recently, developers had been holding back or scaling down launches and setting more reasonable selling prices, after 10% to 20% hikes in 2010 and the first half of 2011. “Although mortgage approvals and applications rebounded in February this year, after the sharp drop in January (partly due to festive holidays), they are 27% and 18% off 2011’s peak respectively.”

By The Star