A strong economy in 2010 has contributed to impressive growth in the Malaysian real estate market. The national housing price index rose 6.5% in 2011, with the market in Kuala Lumpur jumping by 11.4%. The gains in transactions and sale prices are not seeing the same gains that were seen in 2010 and there are fewer builds moving forward, but the country appears to be riding a steady wave of economic growth, helped along by a peaking rate of inflation that is projected to level out or even decline. For more on this continue reading the following article from Global Property Guide.
The national house price index rose 6.5% y-o-y to Q1 2011, after annual increases of 7.9% y-o-y in 2010, according to the Valuation and Property Services Department (JPPH). When adjusted for inflation, house prices rose by 3.4% over the same period.
In Kuala Lumpur, the house price index surged by 11.4% y-o-y to Q1 2011, with a rise of 7.1% during the latest quarter. House prices also increased in Selangor (9.6%), Perak (8%), and Negeri Sembilan (5%) over the same period. On the other hand, in the year to end-Q1 2011, Pulau Pinang and Johor experienced price falls of 1.2% and 1%, respectively.
By property type, nationally:
• Terraced houses rose 7.7% y-o-y to Q1 2011
• Detached houses rose 5.8%
• Semi-detached houses rose 5.3%
• High rises rose by just 0.9% over the same period.
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The national average price of houses was MYR201,851 (US$67,791) in Q1 2011, based on the latest figures released by the JPPH.
In 2010, property transactions rose by 11% y-o-y to 376,583 while transaction values increased by 33% y-o-y to MYR107.44 billion (US$36.08 billion), according to C.H. Williams Talhar & Wong, a local real estate services company.
There were about 7,982 units sold in 2010, up 21.6% from 6,563 units sold in the previous year. However in Q1 2011, total property sales dropped by 36% to 1,033 units from 1,607 units in the same period last year, according to the JPPH.
In Q1 2011, there were just 6,109 new housing units launched in the market, down 52.3% from the previous quarter and a 59.3% drop from the same period last year, according to JPPH. In 2010, there were a total of 55,768 units launched, up 14.3% from 48,791 units launched in 2009.
In 2011, moderate property price increases are expected in Malaysia, based on the 2011 Property Market Report (PMR) published by C.H. Williams Talhar & Wong.
Malaysia’s economy grew strongly in 2010, with a real GDP growth rate of about 7.2%, after experiencing a 1.7% contraction in 2009. In 2011, the economy is expected to grow by 5.2%, according to the Malaysian Institute of Economic Research (MIER).
In June 2011, inflation may have peaked at 3.8%, driven by high electricity and gas prices. In 2011, the inflation rate is to stay in a range of 2.5%-3.5%, up from just 1.7% in 2010.
Despite inflationary pressures, Bank Negara Malaysia maintained the benchmark Overnight Policy Rate (OPR) at its current level of 3%. However, some economists predict that the central bank will eventually hike the OPR by 25 basis points later this year, and by another 25 basis points next year.
This article was republished with permission from Global Property Guide.