Malaysia clamps down on foreign investment for new year

The country's latest regulations, which come into force in January 2014, will introduce higher real property gains tax (RPGT) for all property purchases worth over RM1 million. The move is designed to curb speculation within the country's property market, as rising prices and strong international demand spread fears of housing bubble - concerns that have seen similar measures introduced in other neighbouring markets.

The minimum value of property international buyers can purchase will also be increased from RM500,000 to RM1 Million, which will greatly impact those from abroad looking to buy affordable Malaysian real estate.

Some experts, though, suggest that the new laws will not necessarily reduce house prices as hoped.

Datuk Michael Yam, President of the Real Estate and Housing Developers Association, tells Global Property Guide that it could encourage buyers to hold on to properties rather than sell to avoid higher tax rates, which would reduce secondary market supply, pushing prices even higher.

“Prices are not going to reduce,” he said. “At best it will stabilise. At worst, the rate of escalation will be slower.”