Time to impose stronger policies to weed out property speculation

WE have heard all the reasons for the increase in property prices. Land is getting expensive, building materials are costlier and interest rates are low and so on.

Now, Syarikat Perumahan Negara Bhd managing director Datuk Dr Kamarul Rashdan Salleh has said the buying of homes by non-Malaysians was pushing up the price of homes.

There is truth to that but we should not be putting the blame solely on foreigners for the hike in property prices.

Rich foreigners, like their Malaysian peers, will buy luxurious condominiums, sprawling bungalows and expansive semi-detach homes. Those with money will know that property prices in the hot urban areas have surged in recent years and over the long-term, they will stand to make a pretty decent capital return from their investment.

There had been stories of people buying multiple units of homes when they were launched.

Those at the back of the queue would just have to find a house somewhere else after being told the units on sale had all been sold. Urban migration means that this issue will get amplified in the years ahead.

All of this has led to frustration as the dream of owning a home is increasingly escaping most of the low and middle-income segments. Not helping matters is the crawling pace in the construction of affordable homes.

There are homes to be bought in places most of us now will be shaking our heads with disbelief if told that is where we have to live given the price of homes these days.

But why blame foreigners for pushing up home prices and forcing more Malaysians to live in the fringes of big cities when policies do nothing to stop that from happening? Do the number of expatriates and work permit holders mirror the purchases done by foreigners? Or are foreigners buying homes as an investment?

It comes as little surprise that foreigners and Malaysians share the same hurdles when buying a home. Yes, there is a floor price for houses foreigners can buy and the price of most new luxurious homes foreigners might want to buy are above that limit anyway.

If policy makers are serious about at least putting some brakes on foreign money flowing into homes in Malaysia, they should just see what other countries are doing. Singapore has a 10% additional stamp duty on foreigners buying homes and only allows a small number of foreigners to buy landed properties.

Doing that in Malaysia will have its repercussions though. Imagine what will happen to demand for the new upmarket homes being built in southern Johor, especially Iskandar Malaysia, where the focus is on building homes for Singaporeans and other foreigners.

An exemption can be granted for certain projects but on the whole, policies should be strengthened to weed out excessive speculation in home buying.

The real property gains tax should be punishing and maybe there should be a limit to the number of houses a person, Malaysian or foreigner, can buy at a new launch to just one.

Acting business editor (features) Jagdev Singh Sidhu wonders why people can't buy homes in established neighbourhoods instead of paying the same price for a new home so far away from the city centre.