Recently, I have come across a significant number of doomsayers discussing the Malaysian property market. However, I would like to share my perspective that property prices in Malaysia are unlikely to decline. Here are a few reasons supporting my viewpoint:
RGPT implementation: With the introduction of the Real Property Gains Tax (RGPT), potential buyers and sellers will factor in this tax when determining property prices. This means that property prices will incorporate the RGPT, reducing the chances of a significant drop in prices.
Build-then-sell implementation: The Malaysian government has committed to fully implementing the build-then-sell concept by 2016. Under this system, developers must complete the construction of a property before selling it. This shift places more risks and financial burdens on developers, leading them to adjust their prices accordingly. Consequently, it is logical to expect an increase in house prices due to these added factors. Currently property developers practice STB (Sell then build), where house buyers pay 10% and continue to pay the progressive payments for their unit as the developers build. No timeline has been set to fully implement yet but if Build-then-sell concept comes into play then it will increase costs to developers.
Cost factors: In Malaysia, property prices are significantly influenced by costs, including land and raw materials. As these costs continue to rise, it puts upward pressure on property prices. Therefore, it is reasonable to anticipate that property prices will remain stable or even increase due to these underlying cost factors.
These are just a few reasons supporting the notion that property prices in Malaysia are unlikely to experience a decline. In a future blog post, I will provide additional insights and reasons to further strengthen this perspective. Stay tuned for more updates.