Singapore buyers not responsible for rise in Johor property prices, says economist

KUALA LUMPUR (March 20): An article written by a political economist and published in Channel NewsAsia has called on Malaysians not to blame Singaporeans for pushing up property prices and the cost of goods in Johor.

“An annual survey by the ISEAS-Yusof Ishak Institute of Johor residents since 2013 reports that over 40% blame Singaporeans for a higher cost of living. More than 70% think that Singaporeans make property unaffordable for locals, and about 80% agree that limiting the sales of properties is a good move,” wrote Khor Yu Leng, a political economist with Segi Enam Advisors.   

She explained that instead of the Singaporean factor, “data and a wider reading of the issue suggests strong domestic forces at play”.

Khor said in fact, “In terms of affordability, Johor Bahru’s figures look somewhat comparable to the rest of Malaysia with the median house price to the median annual income ratio stands at 5.1x,” compared with “Kuala Lumpur City and urban Selangor (Shah Alam, Subang Jaya, Petaling Jaya) are higher at 6.0x plus. George Town in Penang was the worst with prices at 10.4x”.

She said Singaporeans are not the only foreigners involved in the Malaysian real estate market and she used the example of the Malaysia My Second Home (MM2H) programme.

Khor cited figures of about 3,200 successful applicants in the MM2H scheme each year.

She puts this into perspective: “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 mostly from China (28%), Japan (12%), Bangladesh (11%), United Kingdom (7%), and Korea (4%).

Singapore buyers only make up 3.8% of the total over a 15-year period leading to August 2017.”

Khor also said that… “it is surprisingly hard to lay the blame on Singapore visitors. First of all, the data is surprisingly scant and inconsistent.

“Significantly, there are various forces at play, including the arrival of other groups of well-heeled investors. Singapore’s prominence as Johor property buyers seems to be eclipsed by those from China.”

“In addition, Johor residents seem reasonably insulated from the property enclave boom-glut dynamics targeted at foreigners but they are not immune to domestic-driven affordability problems.”