Ipoh’s Escalating Property Prices

Cover Story

By Emily Lowe

Ipoh has seen her fair share of property launches over the past few years. And like everything else these days, prices of these recently launched properties have been steadily going up. “Ridiculous” was how an investor described the scenario. Are property prices really shooting through the roof, or is it just that people have found yet another reason to complain about rising prices? Ipoh Echo attempts to put this issue into its right perspective.


To Buy or Not to Buy and When is the Right Time?

It has been observed that as recent as 4 to 5 years ago, a new standard double-storey terrace house in Ipoh with a land size of 20’ x 70’ could be purchased at an average price of RM200,000. In 2013, new houses of this size are touching RM400,000, and they are further away from the heart of the city.

In the past year, a new housing development has seen an appreciation of RM111,000, or 44 per cent within eight months from the launching of the project’s Phase One to Phase Three. An Ipoh-based manager for mortgage sales with a bank opined that depending on location, residential properties here are appreciating by 5% to 20%  a year.

The recently launched Meru Eco-Village from Kinta Properties in Meru Golf Resort had all their linked villas which was selling for RM560 per square foot net, sold out even before their public launch in November last year. Also over 50% of their 84 apartments ranging in price between RM273,800-RM439,800 have been sold since their launch in January this year.

The above testimonies appear to support the fact that property prices and demand in Ipoh have in fact appreciated significantly in recent years. So what are the factors behind this increase in price and demand?


The general improvement on the well-being of the economy has increased the demand for property in Ipoh, both owner-occupied and as investment. This improvement is mainly driven by growing touristic interests, as evidenced by the vibrancy of hotel and food-related industries.

More than a dozen hotels of various sizes have mushroomed in Ipoh in the past two years, with even more to come. Those involved in food and beverage, for example, have been enjoying brisk business due to Ipoh’s reputation as a food haven.

Although property purchase in Perak is mostly driven by effective home ownership demand with little speculative element, demand is also contributed by those who work outside of the state; spurred by the need to upgrade the lifestyle of family members back home and also as a home to retire to in the future. Ipoh’s improved connectivity has also seen increased demand from out of state purchasers both for residential, as well as commercial properties.

Increase in Development Costs

This demand has not only driven up property prices, but also prices of land. Therefore, it is now more costly for developers to acquire land to build on. A piece of freehold land in Ipoh’s prime zone along Tiger Lane that was sold for less than RM80 per sq. ft. four years ago has appreciated to RM120 per sq. ft. today. Other contributing factors are increase in cost of fuel, transportation, building materials and labour.

Meanwhile, contributions to various regulatory bodies and other service providers such as Indah Water Konsortium, Tenaga Nasional Berhad and Telekom Malaysia, have all increased, adding to the overall increase in development costs.

At the same time, as part of the Town And Planning Act 1976, developers are required to pay a quarter of the total appreciation in land value after its conversion to housing or commercial development as tax to the state government. According to a source, if this new development charge is fully passed on to buyers, they can expect to pay between RM50, 000 to RM100, 000 more per unit.

Bumiputera reserved lots

With effect from January 1, the new guidelines on Bumiputera reserved lots are:

  • A price discount of 5% for houses under RM350,000 and 7% for houses above RM350,000,
  • Fifty percent of the unsold Bumiputera reserved lots will be released upon 70% completion of the project and the balance 50% upon attaining Certificate of Completion and Compliance (CCC). A similar percentage sum will be payable to ‘Akaun Amanah Hartanah Bumiputera’ (AAHB) in consideration of this release.

This is a change from the previous policy which provided for a 5% discount on prices across the board. Also, developers need not make any payment to AAHB, which is managed by Perak State Economic Development Corporation (SEDC).

Curbing property speculation

a) Curtailment of housing loan

In an effort to avoid overheating of the market, since July, 2013, Bank Negara Malaysia (BNM) has made it more challenging for property buyers to take out a housing loan. Moreover, the maximum housing loan tenure is now capped at 35 years, compared to 40 years previously.

b) Real Property Gains Tax (RPGT)

The tabling of Budget 2014 on October 25 last year saw the proposed revision of RPGT. With effect from January 1, for properties disposed within the first three years of purchase by an individual, RPGT has been substantially increased to 30% from the previous rate of 15% in the first two years and 10% in the third year.

Properties disposed during the fourth year are imposed 20% tax and 15% during the fifth year, an increase from 10% previously. From the sixth year and beyond, properties disposed are not taxed.

These are just two of the pre-emptive measures taken by the Government to prevent the development of a property bubble in Malaysia. More stringent controls can be expected to be in place to help cool the market down.

Genuine buyers would not find these measures an obstacle in owning a home that is within their budget. They would still be able to take out a maximum of 90% housing loan on their first home purchase.

Keeping Prices Reasonable

While businessmen would generally price their products to what the market can bear, not all developers are out to maximise on profit.  According to Victor Lee, Executive Director of Golden State Properties Sdn. Bhd., developer of Casa Bintang Residence, he believes that it is more important to optimise returns for all stakeholders.

As such, despite the drastic increase in overall development costs, the company has managed to peg the selling price of Casa Bintang Residence at an attractive starting price of RM480 per sq. ft.


In an increasing environment of rising prices, it’s not surprising that property prices are appreciating rapidly, even though prices in Ipoh are still relatively low compared to other major Malaysian cities.

According to the 2013 Property Market Report released by valuers C H Williams Talhar and Wong, the average price for 2012 in Ipoh was RM250,000 for a double-storey terrace house on a plot of 22’ x 70’ freehold land, while a similar property transacted during the same period was RM730, 000 in Kuala Lumpur, RM800, 000 in Penang and RM420, 000 in Johor Bahru.

With spillover demand from Klang Valley and Penang, coupled with the implementation of Goods and Services Tax (GST) effective April 1, 2015, prices of property will continue to stay firm, if not escalate, although anti-speculative measures as well as expected reduced spending power may curtail it somewhat.

Dato’ Francis Lee, Perak Chairman for Real Estate and Housing Developers’ Association Malaysia (REHDA) Perak has this to say, “Property development will remain as a core development into the next decade, as home ownership within family units is still low at about 65%. That is to say that 35% of family units will need to buy a house as and when they feel financially secure to do so. House prices will continue to move upwards over the years, due primarily to the cost of delivery of houses.”

The two burning questions on every Ipohite’s lips today are to buy or not to buy? And when is the “right” time to buy?

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