2012 - Malaysia Property Market Gonna Sustain?

December 2011, Singapore announced:

1. Foreigners and companies will have to pay an extra 10% stamp duty on residential property purchases.
2. Permanent residents buying their second property or subsequent residential units will be required to pay an extra 3% stamp duty
3. Citizens buying their third or subsequent residential units will be required to pay an extra 3% stamp duty

When this happened, many people said this is a good news for Malaysia Property Market as foreign investor will seek alternative and move towards Malaysia properties.

Is this really the case? I don't really believe this in its entirety. The reasons are as follows:

a) Mortgage rate in Singapore is much lower compare to Malaysia (assume the exchange rate is 1 to 1)

• Say getting 400k loan for 30 years, based on current interest rates
• In Malaysia, your installment will be approx. 2,000/month (BLR-2.2%)
• In Singapore, your installment will be approx. 1,340/month (0.9%+SIBOR)
• That's 33% less compare to the monthly installment you pay in Malaysia.

So do you think investor will willing to pay extra just b'cos of the 10% stamp duty imposed by Singapore?

b) No capital gains tax in Singapore. Will investor willing to absorb 10% or 5% capital gains tax imposed by Malaysia for real property held less than five years?

Now come back to Malaysia Property Market - price has increased dramatically in the last few years after the so called "Recession" in 2008. How much longer can it stand?

Jan 2010 - Disposals of Malaysian real property held for less than five years are subject to real property gains tax (RPGT) at a flat rate of 5%

Jan 2010 - Each principal credit card holder will pay a service tax of RM50 and every supplementary credit card will pay a service tax of RM25

Nov 2010 - For third and subsequent property, maximum housing loan-to-value ratio of 70%

May 2011 - BLR increased from 6.3% to 6.6%

Jan 2012 - Loan will be based on net salary, not gross salary anymore.

Budget 2012 - Disposals of Malaysian real property held for less than 2 years are subject to real property gains tax (RPGT) at a flat rate of 10%. Remains at 5% for properties held and disposed within a period exceeding 2 years but not more than 5 years.

Feb 2012 - Hong Leong Bank, Citibank and AmBank increased interest rates for outstanding balance as well as late payment charges starting 1 March 2012.

Mid- 2012 - Government will hold discussions about the implementation of GST (Goods and Services Tax). Planning to introduce this after election to get more cash???

Malaysia has continuously imposed new rules and regulations to reduce investor profit and limit their easy access to loan/cash.

Based on the above, I don't believe Malaysia will STOP creating more rules and regulations to harm the property market.

More to come, especially after the 2012 election. What do you think??