In terms of value, however, the value of total home sales stayed pretty constant throughout Malaysia and Selangor in the first half of this year, compared to 1H2012, although they did drop about 26% in KL.
In terms of average home prices transacted, in fact, that still increased in this year’s first half by a national average of 16% compared to 1H2012, or 19% in Selangor and a whopping 41% in KL.
Indeed, according to Napic’s house price index, house prices increased every year since 1988. Outside of 1998 and 1999, in the wake of the Asian Financial Crisis, the index has increased even in years when the total values of property transactions dropped, such as 2001, 2005, albeit marginally.
Some industry watchers also believe that there will be a surge in demand next year, before the goods and services tax (GST) is implemented in 2015.
“We do not think property prices will correct but rather stabilise allowing a greater pool of buyers to come on stream,” suggested Kenanga Research in its post-Budget analysis.
Nevertheless, property prices in some areas have increased to unsustainable levels, believes Khong & Jaafar managing director, Elvin Fernandez. “For selected hotspots in Kuala Lumpur, property prices are not four times the average household income but 15 times!
“Even for highly popular areas like Bangsar, there has to be a limit. If Bangsar is RM1.5mil, people want to live there, but are you saying that if the price is RM3mil or RM10mil, will people still want to live in Bangsar? At some point, it’s got to stop.”
