Several experts believe that home prices in Malaysia are still affordable so there is no need for additional cooling measures, according to a report by the New Straits Times.
For an average homebuyer, house prices are still affordable despite the steep increases in prices in 2010 to 2011, said Terence Wong, Head of Research at CIMB, citing data from the Ministry of Finance.
"Income has grown faster than house prices in Malaysia, even in the Klang Valley," he noted.
Before the Asian Financial Crisis in 1997, household income rose in tandem with property prices, but after that, income has increased faster than property prices.
Moreover, mortgage interest rates have also fallen over the past ten years.
"Borrowing costs for buying property used to be 10 to 12 percent. It used to be base lending rate (BLR) plus two percent, but in the last two years, it has gone down to BLR minus two percent," he added.
Datuk Ng Seing Liong, Immediate Past President of Real Estate and Housing Developers' Association Malaysia (REHDA), agrees with Wong.
In order for developers to be able to sell homes within the RM150,00 to RM220,000 price range, developers should obtain the land from the government for free, bringing construction costs to RM100 psf to RM120 psf, said Ng.
He added that "if the government build good transportation to these areas, then the affordability problem can be solved."
Other options include decreasing the size of apartments to around 400 psf to 600 psf, and raising the plot ratio of the units and price them between RM300,000 and RM500,000 each.
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