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Media statement by Chow Kon Yeow, Liew Chin Tong and Wong Hon Wai in George Town on Friday, 8th June 2012: Soaring house prices - Finance Ministry's prerogative to intervene On the 7th June 2012, the Star's headline "High-rising prices" which claimed that house prices increased in Penang over the past five years and that the Penang State Government was responsible for the increased, sounds more like a Barisan Nasional propaganda piece targeted at the Pakatan Rakyat state government than an unbiased news report. House prices have increased significantly over the past five years in Kuala Lumpur, Penang and Johore. The soaring house prices driven by the market force, has burdened the Malaysian middle class, especially young families, as well as those in the lower income bracket. The Pakatan Rakyat Penang State Government is fully aware of the challenges faced by those first home buyer and have been working hard on solutions within our remits of power and jurisdiction to address the issue. But, ultimately, it is the Finance Ministry that is responsible to provide the policy responses to the scenario. Only the Finance Ministry has the policy tools, such as real property gain tax and stringent loan requirements, needed to change the situation. Deputy Finance Minister Donald Lim said on 3rd April 2012 to the Malaysian Insider that "an average increase in house prices of 10-15 per cent per annum is healthy as compared to fixed deposits in the bank." "For areas like KL, a 20 per cent increase is quite acceptable." If this is the view of the Finance Ministry, no wonder house prices are increasing. One of the measures to curb real estate speculative activities in the property sector as announced by the Federal Government in its budget 2012 on 7th October 2011 is the revision of real property gain tax (RPGT) rate. For properties held and disposed within 2 years, the RPGT rate is 10%. For properties held and disposed within a period exceeding 2 years and up to 5 years, the rate is 5%. Properties held and disposed after 5 years are not subject to RPGT. RPGT was introduced in Malaysia at multi-tier rates since year 1995 up to 2007. It was suspended from 1st April 2007 to 31st December 2009 in a move to shore up the sluggish Malaysia property sector affected by the world financial crisis. In January 1, 2010, RPGT was reinstated at a single rate of 5% for all taxable gains (for all disposal within five years). The Star has painted the picture that property prices have increased between 2007 and 2012 in Penang. The fact is property prices have increased in the last five years in all major cities in the country. And one of the many reasons is certainly the exemption of Real Property Gain Tax between 2007 and 2009, and the subsequent low rate. * Chow Kon Yeow, DAP Penang Chairman, State Exco for Local Government and Traffic Management & MP for Tanjong,
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