In a commentary carried by Channel NewsAsia, Khor Yu Leng from Segi Enam Advisors Pte Ltd said there was scant and inconsistent data to support the belief, adding that Singapore’s property buyers had been eclipsed by those from China.
According to a recent survey on Johor residents by the ISEAS-Yusof Ishak Institute, over 40% of Malaysians blame Singaporeans for the higher cost of living there and more than 70% think that Singaporeans make property unaffordable for locals.
But Khor said it was too simplistic to blame Singaporeans for this, as the “data and a wider reading of the issue suggests strong domestic forces at play”.
He quoted figures from the Malaysia My Second Home (MM2H) programme showing that Singaporeans are not the foreigners buying the most properties in Malaysia.
According to MM2H statistics, about 3,200 applications from foreigners are accepted each year.
“Assuming each buys their own place, only around 1.1% of new housing and commercial units across Malaysia each year are sold to foreigners seeking a residency permit.
“Most who have signed onto the programme come from China (28%), Japan (12%), Bangladesh (11%), the UK (7%), and Korea (4%).”
Khor said Singapore buyers only made up 3.8% of the total over a 15-year period leading to August 2017.
“Of course, there would be Singapore and other foreign buyers who invest in Malaysian property while not seeking to apply for MM2H status. So it is surprising to find that the Inland Revenue Board’s (IRB) stamp duties system reports a ratio of 0.3% to 0.7% sold to foreigners each year in recent years.
“Averaging MM2H and IRB data, about 0.85% of property sales in Malaysia are to foreigners.”
Khor said while Johor seemed to have drawn disproportionate foreign buyer interest with 10.8% of Johor properties sold to foreigners in recent years, the Penang Institute concluded that “Chinese investments in southern Johor have split the property development into a high-end market with excess supply targeted at foreigners as buyers, and a lower-tier market driven by local developers targeting mostly local buyers”.
He said Bank Negara Malaysia had reported that average Malaysian house prices had increased faster than average incomes since the global financial crisis.
Johor, he said, had seen a property boom with per square foot prices in some enclaves reaching Kuala Lumpur city centre levels. Yet, it had also witnessed a major slowdown with a marked drop in transaction volume and property value since 2017.
In the third quarter of 2017, there were 6,129 residential property transactions, with only 17% above RM500,000, slightly down from 18.4% in the third quarter of 2016.
“If we combine residential and commercial properties, including small offices, home offices and serviced apartments, there were 6,920 transactions but only 20% above RM500,000.”
In terms of affordability, Khor said, Johor Bahru’s figures appeared comparable to the rest of Malaysia with the median house price to median annual income ratio at 5.1 times, although this is higher than Bank Negara Malaysia’s reported 2014 median house prices in Malaysia which were 4.4 times the median annual income.
In comparison, Selangor stands at 4.0 times, Johor at 4.2 times, and Penang at 5.2 times. Kuala Lumpur city and urban Selangor (Shah Alam, Subang Jaya, Petaling Jaya) are higher at 6.0 times-plus. George Town in Penang was the worst with prices at 10.4 times.
Khor said Johor residents were reasonably insulated from the property enclave “boom-glut dynamics targeted at foreigners”. However, he warned that they were not immune to domestic-driven affordability problems.
“Overall, the data suggests that the impact of foreign buyers is somewhat contained. Johor residents worried about property prices should also be concerned about domestic income growth, long-term planning, housing policy and interest rates – as should Johor politicians campaigning in the 14th general election.”