Malaysian real estate prices will likely rise in line with a broader economic recovery. According to the Malaysian Real Estate Association (Pertama), home prices could increase by as much as 25 percent with properties valued at MYR500,000 (US$107,000) and above expected to be impacted the most.
There is expected to be a flurry of activity in the short term as buyers look to snap up homes before Malaysian real estate prices spike. That is possible thanks to banks still being willing to provide mortgages in a bid to boost the country’s economy.
“Especially houses priced above MYR500,000 which are largely unsold when buyers are more likely to buy homes below MRY300,000. So developers or owners are forced to sell at a lower rate to avoid selling at all,” Pertama President Ismail Omar told Utusan Malaysia. “However, the situation is only temporary, as the Malaysian economy recovers, the housing market is expected to stabilize again with a price increase of around 25 percent. So some people are aware of this, they are scrambling to buy a house now that the price has fallen before the value has risen.”
A significant concern about Malaysian real estate prices rising by 25 percent is the slingshot effect this may have on the property market. The undesirable economic situation caused fewer people to purchase homes, but suddenly skyrocketing prices could price potential buyers out of the market before they had the chance to act.
“The government needs to monitor the current situation of house prices to avoid prices from shooting up which would then make it difficult for the public to attain homes — and prevent a similar cycle of unsold properties,” Ismail noted. “One of the best mechanisms to encourage people to buy a home is through the rental method for the bottom and middle 40 percent households to own homes without the burden of lending.”
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This is a friendly reminder that the Malaysian property market is best avoided at the moment unless you have a good reason to invest, such as retirement. It defies logic that the situation could go from one of stagnation due to a poor economy to skyrocketing prices the moment people start buying again.
While it is understandable that developers and private sellers in the country want to get the highest price possible, there is also a need to offload unsold residential inventory which remains pervasive in many parts of Malaysia.
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