Budget 2014: Initiatives a big boost for affordable housing

DEVELOPERS and property consultants said the Government’s affordable housing initiatives proposed under Budget 2014 would ensure better planning, coordination and execution to meet the urgent demand for such housing units among the lower and middle-income group.

Managing director of property consultancy VPC Alliance Malaysia Sdn Bhd James Wong said the Government’s initiative to establish the National Housing Council (NHC) to develop strategies and action plans to build affordable housing priced from RM150,000 to RM450,000 would help to streamline and plan the one-million-unit target of affordable housing over a five-year period.

“Under the plan, we would need to build 200,000 units of affordable houses a year. But national statistics have shown that only 50,000 units have been built over the past few years, a shortfall of some 40%,” Wong told StarBizWeek.

“It is a very opportune time for all the parties involved – 1Malaysia People’s Housing Programme (PR1MA), state governments, local authorities and private developers – to plan, coordinate and implement strategies towards the affordable housing cause for each state,” added Wong, who is also the publicity chairman and past president of The Association of Valuers, Property Managers, Estate Agents &Property Consultants in the Private Sector Malaysia or PEPS.

Wong said industry estimates showed some 1.7 million households, equivalent to 6.8 million people and some 25% of the country’s population, were still without housing.

The NHC is to develop strategies and action plans in a holistic manner, coordinate legal aspects and the property price mechanism, and ensure the provision of homes in a more efficient and expeditious manner. The council members will comprise federal agencies, state governments, the National Housing Department, PR1MA, Syarikat Perumahan Negara Bhd and the private sector.

Mah Sing Group Bhd group managing director and chief executive Tan Sri Leong Hoy Kum lauded the Private Affordable Ownership Housing Scheme (MyHome) proposal as a positive move for developers to play their part in meeting the affordable housing needs.

“There would be a subsidy of RM30,000 for private developers for each unit built, and the maximum prices have been increased to RM45,000 for low-cost and RM170,000 for medium-cost units. We look forward to exploring this opportunity to see if we have any locations that are suitable for this scheme,” Leong added.

See Hoy Chan Holdings Group director Datuk Teo Chiang Kok said developers had been building low-cost and low-medium-cost houses for the past 30 years that had been largely based on a cross-subsidy model borne by free-market house buyers.

“The subsidy from the Government would lighten the burden of house buyers, especially those in the low-income group and encourage developers to partake in the affordable housing cause,” said Teo.

Real Estate and Housing Developers’ Association Penang chairman Datuk Jerry Chan, meanwhile, said the Government’s proactive role to take the lead in the affordable housing policy was a very positive move. - The Star

Investors cooled by Singapore moves

MALAYSIAN Ann Tan relocated to Singapore last July. She was granted permanent residence status in June this year and aspires to have her own place instead of renting.

She hopes to earn enough to afford a S$1mil apartment as she is not eligible for the Housing Development Board (HDB) subsidy for flats that is offered to citizens.

Tan is one of many who are determined to secure a Singapore property in spite of the cooling measures introduced by the government. Whether she succeeds or not, only time will tell, as the various measures instituted by the Singapore government thus far have been across the board, targeted at developers, Singaporeans, foreigners and holders of permanent residences.

In a report on Singapore Property Market: Proprietary Housing Part II dated Oct 17, research house Credit Suisse revisited the survey it did a year earlier, this time with a special focus on affordability. It also took into consideration the impact of the latest four rounds of tightening measures, some of which were considered as the most stringent. The survey was conducted on a sample size of 300.

The Singapore government has since 2009 introduced nine rounds of tightening measures to cool the property market.

The last several rounds (there were three this year) require buyers to pay a larger downpayment with a shorter repayment tenure, forking out additonal buyer’s stamp duty and other stringent macro-prudential measures to limit over-leverage, among others.

As a result of these slew of measures, Credit Suisse says the Singapore government may have achieved its objective to cool the island’s property market, finally.

Says Credit Suisse research analyst Yvonne Voon said in the report: “Investment appetite has been impacted after four further rounds of tightening since our previous July 2012 survey with 46% respondents indicating that they will not be buying residential property anytime soon.”

The report also said that “buyer appetite is still skewed (towards) properties less than S$1mil, with 85% saying they are not willing to spend more than S$1mil on their purchase. But they are willing to compromise on the property size for proximity to the mass rapid transit.”

With the global economic situation in a state of flux and possible interest rate increase going forward, Credit Suisse expects overall prices to remain “flattish” on the island state.

Incidentally, over the past four decades, Singapore’s private property prices had fallen only three times. In each of these cases, the fall was triggered by external shocks, among them the 1985 oil crisis, the Asian financial crisis, the dot.com crisis and the severe acute respiratory syndrome (SARS) and the Global FinancialCrisis in 2008. Aside from these, prices have not corrected beyond 5%.

“We do not expect ‘panic selling’ (unless we encounter an external shock) as the recent purchases have been acquired under a much more stringent process,” says Voon.

Over the last three years, Singapore households – as with every household around the world – have benefited from low interest interests post-Global Financial Crisis.

The Singapore economy has also benefited from low unemployment rate (2%) and rising household income. This has boosted their affordability.

Now that the interest rate outlook has changed in view of the eventual tapering by the US Federal Reserve, Credit Suisse says it would be realistic to assume that affordability could start falling.

The research house also asked respondents if they knew how much they would have to fork out if interest rates were to increase by 2%. About 40% said “No” while an equal proportion said their monthly mortgage commitment are expected their go up by as much as 20%.

Aside from affordability and the impact of rising interest rates, the report also drew attention to the dependence on leverage in the pursuit to have their dream home, or dream investment.

The report quoted Monetary Authority of Singapore managing director Ravi Menonas saying that “many households could have over-extended themselves, fuelled by (years of) low interest rates and stretched loan tenures.

“The vast majority of mortgage loans in Singapore are on floating rate packages, which means households will face higher monthly repayments when interest rates normalise,” Ravi said.

He also said that mortgages accounted for as much as 46% of Singapore’s gross development product, up from 35% three years ago and that if mortgage rates were to rise by three percentage points, the proportion of borrowers at risk could reach 10% to 15% from an estimated 5% to 10% who are already over-leveraged on their property purchases.

On a broader basis, Ravi said that housing loans and loans for building and construction made up 28% of total non-bank loans. Of the housing loans, 70% are for owner-occupied properties.

“Our sentiment indicators highlight that 42% of the survey respondents know of people who are having trouble meeting repayments or living on an extremely tight budget, and 46% would become over-stretched if monthly instalments were to rise by up to 30%, Credit Suisse says.

The median household income in Singapore is RM6,772 per month including employer CPF contribution, and S$6,000 per month without it.

Does this combination of rising interest rates and falling affordability spell the end of the investment demand?

It certainly seems that way with 46% surveyed saying that they will not be buying anytime soon. Their concerns are not not limited to just rising rates but over supply of residential units, and the possibility of a fall in price going forward. A total of 88% said they will only buy when prices fall. The bulk of them also expect discounts from developers, from 5% to as high as 20%.

Surprisingly, despite the value of today’s currencies, more than a third of those surveyed continue to believe that cash is king in today’s volatile markets.

Has investment demand shifted overseas? Interestingly, for a country perceived to have fairly sophisticated investors, only 44% said “Yes”. Their first choice is Australia, followed by Johor’s Iskandar Malaysia, with as high as 77% of the 300 respondents possibly moving to Iskandar. - The Star

Budget 2014: RM1.9bil allocated for affordable housing

KUALA LUMPUR: The Government allocated RM1.9bil this year to build 123,000 affordable homes in strategic locations throughout the country by 1Malaysia People's Housing (PR1MA), Syarikat Perumahan Negara Berhad (SPNB) and the National Housing Department.

The Finance Ministry, in its Economic Report 2013/2014 released Friday, said RM500mil was allocated to PR1MA to build 50,000 homes in prime locations across the country and another RM300mil to build 30,000 homes in collaboration with private developers.

A total of 320,000 people will own their own homes under the affordable housing programme, when the homes costing between RM100,000 and RM400,000 per unit are expected to be completed in 2016.

PR1MA homes, which are generally 20% cheaper than the current market price, are sold through an open balloting system and are expected to be ready in three years.

For low-income earners, the government has allocated RM320mil to SPNB to build 22,855 homes, including 1,855 medium-cost apartment units and 10,000 units of public housing projects, to be completed in 2015.

Meanwhile, the Government also allocated RM543mil to the National Housing Department to construct 20,454 unit of People's Housing Programme (PPR) units using the Industrialised Building System.

In line with its efforts to create an IT-savvy generation and to equip the people with the latest information, the Malaysian Communications and Multimedia Commission (MCMC) has allocated RM150mil to establish 1Malaysia Internet centres (PI1M) in urban PPR areas.

It was reported that by August 2013, some 359 PI1M were established.

In addition to the high housing market prices, the young generation in the country has difficulty in making the downpayment to purchase a home.

Therefore, the government has introduced the My First Home Scheme, a home financing scheme enjoyed by young people earning less than RM5,000 for individual or joint income of up to RM10,000 and, in August 2013, some 108 applicants received approval from the banking system.

Apart from addressing the issue of housing, the government has also expanded the urban public transport network.

"Syarikat Prasarana Negara Berhad launched Rapid Kuantan in December 2012 following the success of Rapid KL and Rapid Penang," the report said.

KTM Komuter has also extended its 50% discount on fares to all Malaysians earning less than RM3,000 since November 2012, in addition to the discounts given to pensioners, the disabled and students with a total of 158,000 passengers have benefited from the discount since June 2013. - Bernama

Budget 2014: Higher tax will help stabilise house prices

THE National House Buyers Associa­tion (HBA) has welcomed the Government’s proposal to increase the Real Property Gains Tax rate, which it said would help stabilise house prices.

The revision was also lauded as an “excellent mathematical formula” to prevent the emergence of a “homeless generation” among young adult Malaysians, HBA honorary secretary-general Chang Kim Loong said.

He said the prices of houses had skyrocketed over the past three years due to speculative buying in the real estate market.

“The Government has taken a step in the positive direction with measures to slow down the steep rise in property prices due to false demand and excessive speculation fuelled by easy mortgages and previous low tax,” Chang said in a statement.

Datuk Seri Najib Tun Razak announced that a Real Property Gains Tax rate of 30% would be imposed on gains on properties disposed within the holding period of up to three years.

The tax will be 20% and 15% if the property is disposed within the fourth and fifth year respectively.

Malaysians will escape tax if the disposal is made in the sixth and subsequent years while non-citizens will be required to pay a rate of 5% for the same period.

Otherwise, a tax rate of 30% will be imposed on non-citizens for gains from properties disposed within the holding period of up to 5 years.

The association also welcomed the announcement to increase the minimum price of property that can be purchased by foreigners from RM500,000 to RM1mil.

“Foreigners must be prevented from snapping up property meant for the lower and middle-income and thus artificially inflating property prices and creating a domino effect which can result in higher property prices across the industry.

“This is especially true for development corridors such as Iskandar Development which has seen foreign purchasers arriving in droves and sweeping up properties with their superior exchange rate,” said Chang.

He also called on the Government to review the stamp duty as an additional measure to bring house prices under control.

“The current stamp duty payable for the transfer of properties is based on the value of the property.

“The Government’s current low stamp duty regime has been misused by property speculators to accumulate multiple properties, driving up these prices by creating false demand and denying genuine buyers the opportunity to buy such properties,” he said. - The Star

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Penang expected to face a glut in high-end homes

By David Tan

28,000 of 48,000 planned new homes are high-end; 40% of middle-income earners cannot afford them

Penang is heading towards an oversupply of higher-end residential properties, which could lead to a correction of property prices.

Raine & Horne Malaysia director Michael Geh said pricing correction would happen when more high-end properties entered the market.

“The price correction is welcome as more than 76% of the urban population earn less than RM5,000 per month and definitely cannot afford to purchase their own homes in Penang,” he said.

CA Lim & Co principal Lim Chien Aun said with the entry of the planned high-end units into the market, there would be downward pressure on property prices.

“Who will purchase these units? Some 40% of the Penang middle-income population cannot afford them,” he said.

The bulk of incoming (properties undergoing construction) and planned property supply (properties with approved building plans) of residential properties in the state is beyond the means of the middle-income group.

In total, there are 55,579 units of incoming and planned supply properties which are in the high-end category.

The latest National Property Information Centre (Napic) report shows that 28,000 of the 48,076 units of incoming supply residential properties comprise higher-end properties of two and three-storey terraced, semi-detached, detached properties, service apartments and condominiums, while the remaining 20,076 units are in the lower-end category where the pricing is around RM200,000 and below.

Even in the sub-sales market, the prices are between RM500 and RM800 psf in the northeast, and RM450 and RM750 psf in the southwest, according to Raine & Horne.Some 10,024 units are on the island, of which 4,657 units are in the northeast district, where property prices range from RM800 per sq ft (psf) to RM1,200 psf, and another 5,367 units are in the southwest district.

Sky homes: Penang island is dotted with many high-rise buildings.

The remaining 17,976 units are in Seberang Prai, where property prices are between RM200 psf and RM390 psf, while the sub-sales prices range from RM150 psf to RM360 psf, depending on whether the property is a condominium or landed, according to Henry Butcher Seberang Prai.

The Napic report also says the planned supply comprises 46,610 units of residential properties, of which 27,579 are two and three-storey terrace, semidetached and detached properties, service apartments and condominiums, while the remaining 19,031 are in the lower category.

Penang Institute urban studies head Stuart Macdonald said there was an oversupply of high-end properties in Penang.

“Our analysis shows there is a greater need for properties priced between RM130,000 and RM245,000.

“The state and the federal governments are planning some 40,000 units of affordable properties priced from RM75,000 to RM380,000. However these projects will be delivered only between 2015 and 2020.

“Forty per cent of the Penang population, the middle-income category, earns between RM3,500 and RM7,100 monthly. Given the new banking loan guidelines which take into account nett income and other commitments, assuming around 20% of income is allocated for settling non-housing debts, this middle-income group may be eligible only to take mortgages of up to RM245,000 with a 10% deposit,” Macdonald said.

He said about half of the planned property supply from the private sector of 46,610 (from Napic) would come into the Penang market in the next couple of years, while the remainder would come in six to seven years. - The Star

Expert: Penang property market speculative in nature

It is not fair to compare property prices in Penang with those in Singapore and Hong Kong, says CA Lim & Co’s principal Lim Chien Aun.

“No doubt among the cheapest in the region, Penang, however, is not a financial centre like Singapore and Hong Kong, where there is substantial expatriate population to support high-end properties.

“Furthermore the foreign participation in the local property market is less than 8%,” Lim said, on the frequent comparison of property prices in Penang with Hong Kong and Singapore.

On the speculative nature of the Penang property market, Lim said as the return-on-investment (ROI) was not attractive in Penang, most investors buy properties for capital appreciation reasons and not for rental yields.

“In other words, the Penang property market is very speculative in nature,” he added.

In view of the high pricing of residential properties in Penang, the sub-sales market has now become important, said Raine & Horne Malaysia director Michael Geh.

He said more people were going after secondary property because of the pricing which ranged between RM72,000 and RM350,000.

Geh said strategically located affordable apartments with built-up areas of 700sq ft to over 800sq ft such as the Serina Bay in Sungai Pinang were now selling for RM350,000, compared to RM130,000 in 2005.

“Some apartment projects like the Symphony Park in Jelutong and Ocean View in Sungai Pinang have appreciated respectively to RM400,000 and RM380,000, compared to RM130,000 and RM150,000 when they were first sold in 2000 and 2001, due to their strategic locations,” he said.

“On the island, the sub-sales properties are found largely in the south-west district and in Seberang Prai,” said Geh.The Ocean View units have built-up areas of 870sq ft, while the Symphony Park units are 730sq ft.

“The problem, however, is with the limited sub-sales supply, as there will be many who are also unwilling to sell at the sub-sales price.

“There are also no reasons for them to sell. If they were to give up their homes below the market price, how are they going to take up another home?”

Ideal Property Sdn Bhd chief executive officer Datuk Alex Ooi said the group planned to develop 2,000 units of affordable properties priced around RM200,000, RM300,000 and RM400,000 in Bayan Lepas next year.

“These will take three years to increase. We will plan more of such affordable homes in the near future on the island,” he said.

Penang Town and Country Planning and Housing committee chairman Jagdeep Singh Deo said the state government planned to deliver eight affordable projects comprising 20,000 housing units, three on the island and five in Seberang Prai.

“These properties will be priced between RM72,000 and RM400,000.

“On the island, the location for the projects are in Jalan S.P. Chelliah, Teluk Kumbar and Jelutong.

“In Seberang Prai, the sites for the projects are Kampung Jawa Butter-worth, Ampang Jajar, off Jalan Be-rapit, Bukit Juru and Batu Kawan,” Jagdeep said.

In 2012, according to the National Property Information Centre (Napic), total transactions of residential properties in Penang fell by 23% to 23,266 from 30,674 in 2011, while the total value of transactions was down 7.5% to RM7bil from RM7.7bil in 2011. - The Star

New Strata Management Act 2013 to affect all stakeholders

KUALA LUMPUR: The implementation of the new Strata Management Act 2013 in 2014 will impose more stringent responsibilities on home owners, joint management bodies and developers of strata properties such as condominiums, said property experts.

“This Act is going to affect everybody’s lives and lifestyle. We are always selling things in terms of concept and lifestyle and this is one of the things which will be coming along, and part of the package when you actually buy into strata properties,” said Adzman Shah Mohd Ariffin, vice-president of the Royal Institution of Surveyors Malaysia (RISM).

Adzman was speaking at a press conference for the 23rd National Real Estate Convention yesterday. 

He highlighted the duty of developers to hand over the strata titles to the purchasers as soon as they hand over the keys. While in the past the strata titles might have taken as long as six months to a number of years to be transferred to the owner, the new Act requires the transfer to be done up front. This will prevent cases in which developers change the designated common property for home owners into retail space.

The Strata Management Act 2013 requires the registration of finalised plans and division of parcels within the property to be given to the commissioner in advance of completion. Developers will face higher costs in commissioning surveyors to do so, in contrast with the past, when plans were drawn up as long as up to six months after construction was completed.

The Act will impose heavier penalties on various parties. There is an increase from 10 offences in the repealed Building and Common Property (Maintenance and Management) Act 2007 to 35 offences in the current Act. 

Tougher fines will be imposed on home owners who default on service charges, with punitive fines of a maximum RM5,000, compared with RM500 in the past, and imprisonment of up to three years. 

The Act also sees elected joint management bodies of the strata properties facing tougher consequences for neglecting their maintenance duties.

More information on strata management will be disseminated at the 23rd National Real Estate Convention on Real Estate Realities on Oct 24. Other topics that will be covered are Asian real estate investment trusts, the property market outlook for 2014, affordable housing and changing market trends.

According to RISM president P Tangga Peragasam, with small office/home office and integrated developments, and lifestyle concepts being the current market trend, the consequences of the Strata Management Act will become more apparent in the future.

The Strata Management Act 2013 received royal assent on Feb 5 this year and Adzman said it is likely to be implemented in the first quarter next year.


This article first appeared in The Edge Financial Daily, on October 18, 2013.

City & Country: Prices to remain stable until year-end

LOAN applications that were not approved frustrated buyers and sellers of homes in Penang during the last quarter, according to Raine & Horne International Zaki + Partners director Michael Geh.

"The government and Bank Negara Malaysia's initiatives [to curb speculation in the property market] have met their objectives as far as Penang is concerned," he says. "Speculators don't go out to play anymore and have stopped snapping up houses. Real first-time homebuyers, however, are still suffering," Geh says in presenting The Edge/Raine & Horne International Zaki + Partners Penang Housing Property Monitor for 2Q2013.

He says the banking sector should be more "gentle" to genuine first-time buyers while Bank Negara should consider granting them some concessions.

Geh admits that identifying first-time homebuyers is not a straightforward task, but says if nothing is done, they will not be able to buy their own homes.

While some have pointed to the PR1MA programme as one solution, Geh says there are no such schemes in Penang island or on the mainland yet.

Meanwhile, there is a proposal for an inner city electric tram system in George Town, supported by a bus dispersal system. Whether or not this will take off is not known as the project is still in the discussion stages. "I see a trend where you will find more pedestrian and cyclist-friendly streets," Geh says.

There is also no update on the federal government's proposed monorail for the island.

As for the Second Penang Bridge, it will be opened in October instead of September as originally scheduled due to the collapse of one of the ramps on the island in June.

Geh believes the opening of the bridge will have a positive effect on the state's housing market.

"When the second bridge is fully operational, it will lift up tremendously property prices in Butterworth, Batu Kawan and the suburbs surrounding Batu Kawan, Juru and Nibong Tebal on the mainland by as much as 30% to 40%.

A view of Penang … the opening of the second bridge may have a positive effect on the state’s housing market

"On the island, the second bridge is near to the first bridge so there won't be a big change in property prices. However, it will significantly impact new areas in Batu Maung, Teluk Kumbar, Teluk Tempoyak and areas southeast of the island as it will bring more development there," Geh explains.

Currently, that part of the island is relatively under-developed while on the Butterworth side, properties are underpriced, he notes.

On the flipside, the rental market has been thriving over the past six months. "As it is tough to buy houses, many are extending the tenancy of rented properties," Geh says. "There is also new stock in the market that can't be sold so these will be rented out. So, rents will not rise because there are many properties to choose from."

Overall, he says, property prices will remain stable for the rest of the year.

1-storey terraced houses
Prices for this property type generally rose q-o-q and y-o-y except in a few areas. Houses in Tanjung Bungah achieved a 25% increase to RM750,000 from RM600,000 in the previous quarter. Other areas that did well included Sungai Dua and Sungai Ara homes (both by 10%). The same house type in Tanjung Bungah increased 87.5% from RM400,000 in the previous year, followed by Bandar Bayan Baru at 40.63%.

"The significant rise in the price is due to the lack of supply for this type of property," says Geh. "We noted that there is no longer new incoming supply of 1-storey terraced houses on Penang Island. Most developers are building 2 and 3-storey terraced houses to maximise GDV as 1-storey terraced houses fetch a lower selling price.

"Tanjung Bungah is located between Tanjung Tokong, Seri Tanjung Pinang and Batu Ferringi, and is one of the property hot spots on the island.

"Bayan Baru is near the Bayan Lepas Industrial Zone, and is a favourite with factory workers," he says.

"Although most of the existing 1-storey terraced houses are old leasehold properties, they are more affordable than new properties. For example, in Bayan Baru, a condominium unit is priced at around RM400,000 to RM600,000, but you can own a landed property for RM450,000. Less supply and high demand is what makes the prices go up."

2-storey terraced houses
Two-storey terraced houses in Pulau Tikus achieved 15.79% price growth from the previous quarter to RM1.1 million from RM950,000. The area also led in price y-o-y, rising 29.41% from RM850,000.

"Pulau Tikus is a high-end residential area nearest to the George Town city centre," Geh says. "Most of the properties comprise of 2-storey terraced houses, 2-storey semi-detached houses and bungalows. The 2-storey terraced houses are more affordable than other property types in the area, which resulted in positive price growth."

2-storey semi-detached houses
This property type showed modest price growth from the last quarter. Compared with a year ago, however, there was a significant increase. Houses in Sungai Dua rose 18.18% from the last quarter to RM1.3 million from RM1.1 million. Y-o-y, prices grew 85.71%, from RM700,000.

The prices of homes in Island Park, Green Lane, rose 52.73% to RM1.68 million, from RM1.1 million a year ago.

"Many of the 2-storey semi-detached houses are located on the main road and have potential for commercial use, which contributed to the rise in prices," Geh says. "For example, some 2-storey semi-detached houses on Island Park, along Jalan Masjid Negeri and Jalan Delima, and along Jalan Sungai Dua in Sungai Dua, have been converted into car showrooms, furniture showrooms and offices," Geh says.

2-storey detached houses
All houses in this property type showed positive price growth. Houses in Tanjung Tokong rose the highest at 59.09% to RM3.5 million, from RM2.2 million in the last quarter. Y-o-y, prices rose 118.75% from RM1.6 million. Homes in Tanjung Bungah increased 105.88% to RM3.5 million from RM1.7 million a year ago.

"Tanjung Tokong and Tanjung Bungah are high-end residential areas located near Seri Tanjung Pinang and Gurney Drive, which offers mainly new luxury condominiums priced at a few million," Geh says. "As a result, homebuyers may opt to buy a landed villa with a similar price."

Standard 3-bedroom flats
All flats showed modest gains with those in Bandar Baru Air Itam and Paya Terubong rising 15.38% each from the last quarter to RM150,000 from RM130,000.

"These areas are congested with many low-cost and low-medium-cost flats, which do not allow much room for appreciation," Geh points out.

Y-o-y, the biggest gainers were flats in Green Lane that rose 40% to RM350,000 from RM200,000. Geh says Green Lane is doing better than other areas as most of the flats are medium cost and demand is high for this type of property.

Standard 3-bedroom condominiums
Pulau Tikus condo units achieved a price growth of 16.22% from the previous quarter while other areas registered steady growth.

"As Pulau Tikus is a high-end residential area that is nearest to the George Town city centre, the supply of affordable apartments or condo units are limited, so this area will perform well consistently," Geh says.

Previously, the property monitor had taken Cantonment Road to represent condominium prices within Pulau Tikus. However, as condo prices in Cantonment Road can start from RM800,000, they do not reflect the average price in the area.

Thus, the monitor will now look at Pulau Tikus as the area of focus rather than Cantonment Road specifically.

Prices of condos in perennial favourite Batu Ferringhi rose 40% to RM350,000 from RM250,000.

"Batu Ferringhi is a tourism hot spot where the most number of foreigners stay," says Geh. "It is also a more affordable place for high-rise sea view properties on the northern side of the island compared with Seri Tanjung Pinang and Gurney Drive."

This article first appeared in The Edge Malaysia Weekly, on October 7, 2013.

Leave RPGT alone, Govt urged

GEORGE TOWN: The Federal Government should leave real property gains tax (RPGT) alone in the 2014 Budget.

New Bob Group director Dr Lee Ville said that if the RPGT is increased, then it will dampen the property market, which has already started to cool.

Lee is also president of ERA Malaysia, which is the world’s leading real estate brand.

It is expected that the Federal Government will raise the RPGT rate to 30% from 15% for properties sold within two years, and 15% from 10% for properties sold within three to four years.

For properties sold in the fifth and sixth year, the RPGT is expected to remain unchanged at the current 10% and zero RPGT respectively.

“The anticipated RPGT will not deter foreigners from buying, as they are allowed to dispose their properties only after the third year,” he said.

“If implemented, developers will respond by reducing their delivery of residential housing projects.Lee said the anticipated RPGT would work in the initial stages, curbing speculation in the short term.

“This will eventually lead to a shortage, triggering demand and causing property prices to rise up again in the long term,” he said.

Lee said the Federal Government should look into controlling price, other than cement, of essential building materials, as the rising price of raw materials was a reason for soaring property prices.

Meanwhile, Raine & Horne Malaysia director Michael Geh said the RPGT would hurt current speculators who had already bought properties, and not the future ones who had yet to buy properties.

“If the existing speculators are hurt, the banks will also be dragged down.

“The Federal Government should look at curbing speculation through other means such as providing middle-income homes with an effective delivery mechanism that ensures only the eligible income category benefits,” Geh said. - The Star