Property in prime areas of Malaysia set to increase

A leading property services company believes that property prices in the Penang, Johor and KlangValley areas of Malaysia will grow by 10 to 15 per cent in 2011.  Whilst this is a great level of growth, these figures are, surprisingly, even lower than some initial forecasts.

Growth in property values set to be 10 to 15 per cent

National news agency Bernama reported that Foo Gee Jen, managing director of real estate services company CH Williams Tahir & Wong, said that growth in prime areas was set to be 10 to 15 per cent in 2011.  Whilst the company still expects double digit growth, this is lower than the 20 to 25 per cent growth previously predicted.

Foo said that the growth rate was healthy taking into consideration last year’s gross domestic product (GDP) growth of 7.2 per cent.  “Property prices cannot exceed three times of GDP,” he told reporters.

The current high supply of properties in Malaysia is due to properties being brought forward after poor sales in 2010 whilst Foo also stated that a wide gap between GDP and property prices would make the market more vulnerable to speculators.

Government caps on third house funding dampens speculation

The speculation activity was triggered by fears of property bubble following the government’s move last year to impose a maximum lending limit of 70 per cent for third house financing.

Foo told reporters: “The government announcement to lower the cap on the loan-to-value ratio for third house financing gave a bit of psychological effect on people.”

Nevertheless, he said Gombak, Puchiong and Sungai Buloh would have the greatest potential for high price rises.  He attributed this to the proposed mass rapid transit (MRT) project which is scheduled to be completed in 2016.