Prices are not going to reduce
By Danny Bance

New Malaysian rules for overseas buyers to come into effect

New rules to limit speculation in the Malaysian property market are set to come into effect in January 2014 and overseas buyers will find investing in a home in the country will become much more difficult. The real estate environment in Malaysia has been boisterous over the past couple of years, thanks to lax regulations and restrictions, but this is set to change in a bid to bring greater stability.

The Global Property Guide explained that from next month overseas buyers will only be able to purchase property priced at RM1 million (£189,312) or above. Higher property gains tax has also been imposed by the government, going from tiered rates of between five per cent and 15 per cent to a flat rate of 30 per cent if a property is sold in the the first five years after purchase.

While these changes may not have a significant impact on domestic buyers or long-term investors, overseas buyers looking for quick gains or a holiday home could suffer, according to the Global Property Guide. What's more, not everyone is convinced that the changes will cool property prices.

Datuk Michael Yam, president of the Real Estate and Housing Developers Association, said the reforms may encourage people to hold onto their homes for longer, causing supply to decline and prices to travel upwards. "Prices are not going to reduce," he said. "At best it will stabilise. At worst, the rate of escalation will be slower."

However, not everyone agrees with Mr Yam and research from Rahim & Co Chartered Surveyors showed the stringent guidelines will hit spots like Kuala Lumpur city centre and Iskandar's Nusajaya, causing a slowdown. Growth is already easing and during the first six months of the year there was a 12.6 per cent decline in residential transactions in Malaysia year-on-year. The top hubs of Kuala Lumpur, Selangor and Penang even experienced drops, with prices falling 47.5 per cent, 16.2 per cent and 28.1 per cent respectively.
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