On lookout for signs of property speculation, overheating

As the property market makes its recovery, the government has one eye on potential speculative activities.

This is a risk because borrowing costs are still low while developers have their promotions to boost sales. This combination could induce people to bet on rising property prices, aided by an economic recovery.



Indeed, Valuation and Property Services Department director general Datuk Abdullah Thalith Md Thani said the government is concerned about the property market overheating.

However, he pointed out that the government has been taking preventive measures such as the Real Property Gains Tax (RPGT).
The 5 per cent RPGT is applicable to properties that are sold within five years of their purchase.

Still, the property market's recovery appears to be modest as the average price of a house based on The Malaysian All House Price Index, rose by 3.2 per cent to RM184,574 in the last quarter of 2009.

Houses in Kuala Lumpur are the most expensive at at average price of RM381,802, followed by Sabah at RM299,566 and Selangor at RM266,686 in the same quarter.

According to data from the National Property Information Centre, property transactions for the first three months of 2010 rose to 91,979 units, valued at RM25.3 billion, which is 52 per cent higher than in the first quarter of 2009.

Abdullah Thalith said the next three quarters will be better as people generally buy more properties in the second half of the year.

Demand for high-end units priced above RM500,000 will increase steadily. Last year, there were more sales for houses priced between RM100,000 and RM500,000.

By type, terraced houses will still be the most sought after as land prices are rising.

By Business Times