Iskandar Malaysia is seeing the formation of a housing bubble as a result of Chinese developers that have been flooding the property market with masses of projects.
According to Kenanga Research property, things are moving very slow at the corridor especially with houses which are selling above RM600,000. Slowdown can be seen in Iskandar Malaysia if there is an oversupply, coupled with the slew of government measures being implemented, interest rate hikes, low income growth, affordability and capital gain tax.
For example, to curb property speculation, the Singapore government implemented measures such as increasing the buyer’s stamp duty, sales tax and initial down-payment. Prices actually moderated and then fell, as the Singapore URA Residential Prices Index fell 3.2% from September 2013 to June 2014. However, the same trend happening in Malaysia where in the mid to near term, we could see limited upside potential and a lack of diversification for property investments.
For property developers, Iskandar Malaysia remains a hugely lucrative market. Projects keep mushrooming throughout the area as developers launch their prized, high-end houses to a crowd of waiting buyers, specifically foreigners.
What policy makers are concerned about won’t be the million dollar plus homes being built for rich Malaysians and foreigners but the concerned is how Malaysians will be able to fork out an ever-increasing percentage of their monthly take-home pay to purchase a slice of a humble Malaysian dream. Read more