KUCHING: Malaysia is not at risk of a housing price bubble next year or anytime soon and home prices should remain relatively firm, supported by strong domestic demand and sound purchasing power.
Datuk FD Iskandar
Datuk FD Iskandar, deputy president for the Real Estate and Housing Developers’ Association of Malaysia pointed out that in actual fact, the demand for properties in Malaysia would be much stronger than the supply going forward.
“With the implementation of the Economic Transformation Programme and the Greater Kuala Lumpur, the real estate sector is set to experience skyrocketing demand in the coming years,” he told The Borneo Post in an interview.
He revealed that only 1.8 per cent of the total real estate in Malaysia were sold to foreigners last year, unlike Singapore which posted 39 per cent and more.
Demand was skewed more towards residential real estate especially landed properties this year and would remain the same going forward in 2013 and 2014.
Among the key factors that contributed to the domestic demand were the growth rate of the country which was between 2.2 per cent and 2.3 per cent as well as the degree of urbanisation.
“In the 70s, the degree of urbanisation in Malaysia was only about 30 per cent and it increased to 40 per cent in the 80s. Now, the degree of urbanisation in the country is between 55 per cent and 56 per cent,” he elaborated.
He further said that 200,000 houses were sold last year and out of the total, only 50 per cent were new houses while the rest were considered as secondary properties. “We need at least 1.2 million houses for the next eight years, just to cater for the demand of Greater Kuala Lumpur alone.”
REMAINING ROBUST: Property prices in Malaysia are still the lowest in the region, further indicating that it is not heading for a bubble anytime soon.
Greater Kuala Lumpur will have a population base of more than 10 million by 2020, as compared with 5.5 million today.
On the other hand, he also pointed out that property prices in Malaysia were still the lowest in the region, further indicating that it was not heading for a bubble anytime soon.
“The best that we have is the KLCC area, with an average selling price of US$500 per square feet. In Singapore, you will be paying US$,2000 for the same area, while in Jakarta, you will get it in between US$700 and US$800.
“Bangkok and Manila both recorded average selling prices of approximately US$800,” he highlighted.
“Speculation is healthy for the property sector assuming that it stays on the 10 per cent level to keep the outlook firm and stable,” he concluded.