Malaysian property prices are beginning to rise as the economic recovery in the country continues. Last year registered the strongest house price increases for a decade. The national house price index rose 6.2% in the third quarter of 2010 while the increase in Kuala Lumpur was 9.9% during this period. House prices here are still very cheap when compared to Western countries as the average home costs just under $65,000, while a house in Kuala Lumpur will set you back US$142,000.
These property price increases are due in no small part to the recovery of the economy which grew by 7% in 2010, but in general house prices here remain relatively stable and are not subject to the boom bust cycle of other countries. Much of Malaysia's economy is based around manufacturing and it's one of the largest exporters of electrical goods and appliances and semi-conductor devices in the world.
It does depend quite heavily upon exports and was affected by the global economic crisis, especially since the Malaysian ringgit has strengthened against the dollar. Export growth in the country fell from 19.3% in the first quarter of 2010 to just 3.7% in the last quarter of 2010 and is expected to remain in single digits this year, but the worst of the recession in Malaysia was averted by a multibillion stimulus package.
The main attraction for investing here is the reasonable rental yields of between 5 to 7%. The cost of buying a property in Malaysia is quite low, but it's important to regard it as a mid-to long-term investment as capital gains tax is liable on any property held for less than five years.