Amazingly, house prices in Malaysia are still below pre-Asian Crisis 1997 levels. They rose rapidly in the early 1990s in two particularly dramatic surges – in 1991 house prices rose 25.5% (20.3% in real terms), and in 1995 they rose 18.4% (14.4% in real terms).
After the Asian Crisis, prices of luxury detached Kuala Lumpur houses then slumped 39% between 1997 and 1999. However, Kuala Lumpur´s house prices since then have significantly outperformed the rest of the country, especially after the economic downturn of 2008-2009, when the property market was revitalized with the help of the Greater Kuala Lumpur Plan, targeting developing key locations, including the latest “The MRT Project”.
The 2013 prices rises, with Kuala Lumpur´s house price index rising by 14.4% (nominal), shows that Kuala Lumpur retains its status as a market leader. Kuala Lumpur´s housing market is now red-hot, with strong price rises.
In 2012 Kuala Lumpur house prices rose 11.1% (9.3% in real terms)
2011: up 12.2% (8.7% in real terms)
2010: up 12.2% (10.3% in real terms)
2009: up 2.5% (-3.1% in real terms)
2008: up 4.5% (-0.7% in real terms)
2007: up 7.9% (5.8% in real terms)
2006: up 5.3% (1.6% in real terms)
2005: up 6.5% (3.4% in real terms)
In contrast national price rises have been more muted. Before this year´s 10.7% national price rise (7.78% nominal) the following price rises were seen:
In 2012 the national Malaysian house price index rose 11.8% (9.9% in real terms).
2011: up 9.9% (6.5% in real terms)
2010: up 6.7% (4.9% in real terms)
2009: up 1.5% (0.9% in real terms)
2008: up 4.7% (a fall of 0.7% in real terms)
2007: up 5.3% (3.2% in real terms)
2006: up 1.9% (a fall of 1.7% in real terms)
2005: up 2.4% (a fall of 0.6% in real terms).
By property type, nationally, during the year to Q3 2013:
The average price of terraced houses rose by 7.8% y-o-y to MYR 238,337 (US$ 72,697).
The average price of detached houses increased 15.1% y-o-y to MYR 458,858 (US$ 139,960).
The average price of semi-detached houses rose by 14.7% to MYR 421,622 (US$ 128,602).
The high-rise price index soared 13.7%, to an average price of MYR 248,567 (US$75,817).
Low interest rates are encouraging mortgage borrowing
The average lending rate fell to 4.56% in December 2013, significantly below historic rates. The Overnight Policy Rate (OPR) is at 3%. This is despite the base lending rate (BLR) being raised in December 2011 to 6.53%, where it remains.
