As the announcement of Budget 2013 draws near, growing concerns in the past year towards escalating property prices and availability of affordable homes are perceived to pique the interest of industry players and the public on upcoming amended or new policies regarding the property market.
In the second quarter this year (Q2 2012), the federal government was reported to have begun mulling the hike of minimum floor prices for residential property that may be bought by foreigners from RM500,000 to RM1 million, a move which has been strongly supported by the state government of Penang.
"Though Budget 2013 will determine that this floor price increase will be mandatory across the country, the move will not likely affect the affordability of homes for local buyers whether positively or otherwise," said John Paul Sta Maria, Country Manager of PropertyGuru Malaysia.
In a statement today, he said that based on the online portal's Malaysia Property Sentiment Survey Q2 2012, 30 per cent of respondents felt the hike would help improve property affordability for locals, however, a close 29 per cent do not believe there will be any major impact on local prices.
He also revealed that 82 per cent of respondents believed the current residential property prices to be expensive while 74 per cent said all property types in Malaysia are expensive as compared with 65 per cent in Q1 2012.
Some 36 per cent of respondents believed that developers are responsible for pushing the rising construction costs and high land prices, 20 per cent indicated it's the herd mentality of buyers which caused an uptrend in prices while 10 per cent pointed to competition with foreigners as the main reason.
Some 70 per cent felt that property prices with further increase in the next six months.
The perception of escalating property prices is not limited to first-time homeowners or those looking to buy a property.
Compared to Q1, only 25 per cent instead of 33 per cent said they are willing to upgrade their existing property in the 12 months.
Concurring with the findings of PropertyGuru, Chief Executive Officer of Malaysia Property Incorporated (MPI) said: "An increase in house prices is evidenced by results of MPI's research with the National Property Information Centre (NAPIC), which revealed that the average price of houses below RM500,000 had risen by 25.8 per cent between 2004 and 2011.
"As seen from last year whereby seven out of 13 states showed double-digit house price increases...the core issue on price increase seems to be state dependent."
However, despite the increase in prices, the market is expected to grow due to increasing demand.
Some 68 per cent of respondents versus 64 per cent in Q1 2012 believed the number of property transactions would increase in the next six months.
"Rural-urban migration is also another factor, and of course people could be buying homes in new locations further from the city instead of urban centres," said Sta Maria.
While the market seemed healthy, all eyes will be fixed on the government and Budget 2013 as to how policymakers will act in response to current market sentiments.
Previously, the budget included the reintroduction of Real Property Gains Tax (RPGT) for properties sold within the first two years of purchase (up to 10 per cent) to curb speculation and the launch of the PR1MA (1Malaysia People's Housing) programme to provide affordable homes.