Home prices in Malaysia may not necessarily come down despite the cooling measures unveiled last week.
Labour and material costs have risen by 10-15 per cent since June after a crackdown on illegal foreign workers, even as property launches rose in Iskandar Malaysia, pushing demand up, said Eastern & Oriental (E&O) deputy managing director Eric Chan.
"Although in the short term sentiment will be affected, to me it's a question of whether people believe in the story of Medini or Iskandar Malaysia. Those who do will continue to buy because they are buying for the mid to long term," he told The Business Times in a telephone interview.
Overall demand for homes is expected to soften following a sharp increase in property taxes and the banning of the Developer Interest Bearing Scheme, which will come into effect on Jan 1 next year. The measures were announced in last week's budget.
Even so, E&O is sticking to a planned year-end launch for Avira, its maiden project in Johor's Medini, for which it is partnering sovereign wealth funds Khazanah Nasional and Temasek Holdings.
Interest in the project has been encouraging. Already, some 2,000 prospects have registered for the 200 units of terraced homes to be offered in the first of three phases of the RM3.5 billion (S$1.37 billion) mixed development on about 85 hectares, which has "wellness" at its core.
Mr Chan said that the link homes will cost at least RM1 million because "from feedback buyers want a more complete product including fittings".
He is confident that demand for Avira's terraced houses (of about 2,200 square feet built-up) will remain strong despite the government doubling the minimum floor price to RM1 million from RM500,000 and more punitive taxes.
Not only is the buying interest 10 times the number of units available, Avira is backed by Temasek and Khazanah. And even at RM500 per sq ft (psf), Mr Chan reckoned that the landed homes "are still a good proposition for the market".