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.
When will be the ‘right time’ to invest in Iskandar?
The answer is now! At any point of time majority of people would never realised ‘Now’ is always the best time to take action while a lot of people will either choose to enjoy the victim feeling of “Ohh… I missed the opportunity, if I’ve bought it 3 years ago I would have been a millionaire now…”
For a proper fundamental investor, anytime is the ‘right time’ to investment regardless in the good or bad market as long as we invest on the ‘right’ properties. Same for Iskandar, despite of lots of general negative perception, there are still plenty of opportunities around as entire Iskandar is still at its very early stage towards its target in 2025.
In general, the GST effect will affect the property prices even higher, be it commercial or residential because it would be generating a chain effect on the rising of material cost. Literally, the overall construction cost has already increased by the main-con and sub-con now especially in Johor/Iskandar earlier before the GST kicks in. We would expect the property prices to be higher and its impact visible when this could lead to the sole factor for investment consideration.