Report says property prices in Singapore led to Malaysia property bubble
The four-year property boom in Singapore has spilled over to Malaysia where foreigners are now flocking to buy homes, according to a Bloomberg report. The report cites the 45-minute commute that lawyer Chris Metcalf has to do each day from Iskandar in Malaysia to Singapore where he works at Clyde & Co. Metcalf said he moved in Iskandar after realizing that it was not possible to live in Singapore on his salary with four kids. He told Bloomberg, ""It's too expensive to live in Singapore. We're selling a house in the U.K. and when we do we'll consider buying in Malaysia because it's definitely better value."
Home prices in Malaysia have gone up as a result of the spillover. Citing data from Knight Frank, a property broker, the report said home prices in Horizon Hills in Malaysia have increased nearly three times in the past five years with the escalation of foreign buying. Metcalf lives in Horizon Hills.
The Malaysian government is now trying to prevent a real estate bust and calming the locals who have complained that it had become impossible for them to afford a home in their country. Prime Minister Najib Razak increased to twice the minimum amount for foreigners wishing to purchase a property in Malaysia in last month's budget. He also increased the capital gains tax to 30% on the properties that foreigners will sell in five years. The report also said that local governments in the Johor and Penang states are mulling on imposing more taxes for foreigners who wish to buy real estate.
Malaysia continues to attract property buyers from Singapore because of the difficulty of buying real estate in the island state. Knight Frank Asia Pacific Research Director Nicholas Holt told Bloomberg, "Malaysia has certainly been the recipient of a lot of Singaporean money since the tighter cooling measures here. Singaporeans probably top the list in terms of overseas buyers in Malaysia, most notably in Iskandar, but also in Kuala Lumpur and Penang."