According to statistics from the National Property Information Centre (Napic), approximately 1,170 units of residential property costing RM1 million and above exchanged hands in the first quarter of 2010. This is a significant increase of more than 50 per cent compared to the 750 units sold during the same period last year. Excluding residential housing transacted between RM50,000 to RM100,000, all the other six price categories between RM100,001 to RM1 million witnessed an increase in transaction numbers.
This situation is not entirely surprising though, and according to Malaysia property consultants polled, it has a lot to do with consumer confidence. Although the world has yet to completely come out of the financial rut started by U.S. sub-prime problems, the matter of the fact is that Malaysians have become richer - whether it is because of the stronger Ringgit or the red-hot local stock market. Personal incomes have also increased and hence, people are willing to put down more money on big ticket items.
The increased confidence and stronger purchasing power are motivating first-time home buyers to snap up entry-level properties, existing home buyers to upgrade to bigger homes and the higher-income group to purchase for investment. Naturally, the easy financing arranged by property developers with the banks and record-low interest rates of up to Base Lending Rate (BLR) minus 2.5 per cent are supporting factors as well.
Although the average price of houses in Malaysia have creeped up a mere 37 per cent in the last 10 years based on the national Housing Index, this number does not apply to major cities like Kuala Lumpur, Johor Bahru and Penang.
In fact, it was only in June this year that a local corporate figure made headlines for paying a whopping RM38 million for a triplex penthouse unit at The Binjai On The Park in Kuala Lumpur City Center. Located on the 42nd-storey of Tower B, the buyer was said to be attracted by the 360-degree unobstructed view of the beautiful KLCC skyline, similar to London's One Hyde Park, according to newspaper reports. At RM38 million, the price for the 14,300 square feet private apartment works out to almost RM2,700 per square foot.
Will Malaysia property prices continue rising at its current blistering pace or will the prices collapse, is anybody's guess. While countries like China and Singapore have already begun implementing new housing policies like higher down-payments and property gains tax, and also increased interest rates to rein in property prices, the Malaysian government has not shown any signs of concern. Instead, Prime Minister Najib Razak announced stamp duty exemptions for first-time home buyers and zero down-payment for residential property costing up to RM220,000 during the recent Budget 2011 in October.
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