Real estate values in Klang Valley, Penang and Johor will likely grow at a slower pace this year, due to increased supply and speculation activities, according to a real property services company.
Foo Gee Jen, Managing Director of CH Williams Tahir & Wong, said around 10 to 15 percent growth in the prime areas has been seen this year, compared to 20 to 25 percent previously.
However, Mr. Foo considered this to be healthy, compared to the previous year’s gross domestic product (GDP) growth of 7.2 percent.
“Property prices cannot exceed three times of GDP,” he said.
“A wide gap between the growth in property prices and GDP would make the market more vulnerable to speculations.”
Mr. Foo also remarked that the increased supply of properties was due to the introduction of unsold properties from last year’s poor sales performance.
Meanwhile, fears of a property bubble triggered speculation activity after the government imposed a maximum lending limit of 70 percent for third-home loans last year.
“The government announcement to lower the cap on the loan-to-value ratio for third house financing gave a bit of psychological effect on people,” he said.
Nevertheless, Mr. Foo added that Sungai Buloh, Gombak and Puchong would have the greatest possibility of high price increases, boosted by the proposed mass rapid transit (MRT) project which is slated for completion in 2016.