Malaysia Moves to Avert Housing Bubble

Kuala Lumpur, Malaysia

Like countries around the globe concerned with rising home prices, tiny Malaysia is taking steps to avoid a real estate bubble crash.

The Southeast Asia nation, with a land mass of 127,350 square miles  and a population of 28 million, is writing new rules to curb property speculation, reports The Wall Street Journal.

The country's central bank announced  third-home buyers are now restricted to a maximum loan of 70% of the property's value.

The new rule, which takes effect immediately, aims to curb speculative investments in the country's residential property market, which has seen higher-than-average price increases in some areas, according to the WSJ.

In a prepared statement, Bank Negara said financing for purchases of first and second homes will not be affected. First- and second-home buyers can borrow up to 90% of the property's value.

"The measure aims to support a stable and sustainable property market, and promote the continued affordability of homes for the general public," according to the bank's statement.

Zeti Akhtar Aziz

Central bank Governor Zeti Akhtar Aziz recently said the bank would take action to prevent asset bubbles, including measures to curb real estate speculation.

However, the WSJ reported Zeti had said the central bank wouldn't act unless it saw clear risks of a real estate meltdown.

According to Wikipedia, Malaysia is a federal constitutional monarchy consisting of 13 states and three federal territories.  It is separated by the South China Sea into two regions, Peninsular Malaysia and Malaysian Borneo (also known as West and East Malaysia respectively).

Land borders are shared with Thailand, Indonesia, and Brunei, and maritime borders exist with Singapore, Vietnam, and the Philippines. Peninsular Malaysia is connected to Singapore via a causeway and a bridge. The capital city is Kuala Lumpur, while Putrajaya is the seat of the federal government.

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