Increasing economic development has driven up property prices in Penang, but the state government has taken measures to mitigate this and make affordable property accessible to Penangnites.
Penang is a remarkable state in many ways. With excellent medical facilities and connectivity, a vibrant cultural centre, delectable cuisine, and a wide range of enterprises, it has become the melting pot for residences, businesses, and investment opportunities. Its surge as an international tourism destination in recent years has been nothing short of being impressive. Based on a hotel survey by Tourism Malaysia, with a 45.63% increase in hotel guests from 4,502,099 (2013) to 6,847,569 (2014), Penang has the third-most hotel guests in Malaysia after Kuala Lumpur and Pahang, beating Johor, Sabah, Sarawak, Melaka, and other states.
Given Penang authorities’ ambition to transform Penang into an international intelligence city, no effort has been spared to drive development in Penang. Efforts are being made to enhance Penang’s transportation system and infrastructure, attract foreign investments, and training its local workforce, which could eventually drive the increase in population, as well as create demand for consumer goods and property in the state.
The surge in tourism and economic activity has resulted in a burst in growth for property prices, posing a challenge to Penangnites to own homes. However, the Penang state government had introduced several cooling measures since December 2013.
A moratorium for low and middle-income developments, where the state government will not allow certain types of properties to be sold within a certain period of time, was among one of those measures to prevent property speculators from buying those properties at a cheap price, and selling them two to three times higher than their original value.
The state government also does not allow any property to be transacted within 3 years of the principle purchase, but those who decide to do so will be imposed a 2% approval fee.
Furthermore, foreigners who purchase properties in Penang have to fork out at least double the price floor set on the national level. The floor price for landed property on the island is RM2million. For landed property on the mainland, as well as stratified property on both the mainland and island, the floor price is RM1 million.
Foreigners are also subjected to an approval fee of 3% from the price of the property. In spite of these measures, foreigners are still investing in Penang.
Just last month, the Penang state government had increased the household income ceiling for applicants of affordable housing in the state to enable more people to apply for a bank loan to buy a house.
Previously, the household income ceiling for affordable housing of RM200,000, RM400,000, and RM600,000 was RM6,000, RM8,000, and RM10,000 respectively.
Having considered the fact that the banking sector may view this category of applicants as risky and thus, resulting in a high loan rejection rate, the state government decided to increase the said household income ceiling to RM8,000, RM10,000 and RM12,000 respectively.
For those who previously earned RM6,000, who were eligible for such affordable houses, the Penang state government had introduced a new category of affordable housing, namely units priced at RM150,000.
In order to stimulate sales of such affordable housing units, the state government had also decided to enlarge the pool of eligible buyers to those who already own property. However, the purchaser under this category has to be a registered voter in Penang, and may only purchase one such affordable unit.
The moratorium on the said unit is five years from hand-over of keys, unlike the current five years from the date of the sale and purchase agreement.