Will the sharp price jumps in the Malaysian local housing market lead to an asset bubble? A recent Star Bizweek report analyzes just how real the threat is.

There have been jumps of 40 to 60 percent in areas such as Hong Kong, Singapore, and Shangai, but the housing market has still not hit the roof.

Prices of landed houses in some popular areas in the Klang Valley, Penang and Johor have appreciated by 10 to 30 percent over the past six to eight months. Bank Negara is keeping a close eye on the mortgage loan market and also plans to take stringent measures such as capping the loan-to-value ratio (LVR) at 80 percent. The central bank might not impose the mortgage loan limit across the board but the measure is likely to be targeted at the critical sectors.

Purchasers who own multiple properties may also be subject to the new loan limit.

The real property gains tax (RPGT), which is currently at 5 percent for all property sold within the first five years of purchase, might also be raised. Industry observers suggest this as the Government has tweaked the RPGT on various occasions.

From April 2007 until it was reintroduced in January this year, all gains from property transactions have been exempted from the tax. The exemption was granted as a support measure to reverse the flagging property sales during the market downturn.

Under Budget 2010, the RPGT was brought back in January, albeit at 5 percent for all property sold within the first five years of purchase.

How far the Government will go on tightening the noose on mortgage loans and the RPGT is still left to be seen. But some changes can be expected soon.

If these tightening measures are introduced, they will definitely impact the affordability of properties.

Usually if a market is flushed with speculative buying and a bubble is imminent, property prices will spike sharply across the board of a certain market within a short time.

Real Estate and Housing Developers' Association (Rehda) president Datuk Michael Yam discounts the possibility of overheating or an asset bubble in the local market.

We believe the steep price increases are only reported in scattered locations in the Kuala Lumpur City Centre. This does not represent a bubble but more of a short-term deviation