Property counters dived today amid news that the government is considering an increase in the real property gains tax (RGPT) to stabilise house prices.

The Kuala Lumpur property index was 3.14 percent lower at 1,210.46 points, its lowest since April 29, underperforming the benchmark index's 1.39 percent slump.

The government is exploring the possibility of hiking the property tax to rein in rising housing prices and curb speculation in the market, state news agency Bernama reported on Tuesday.

Bernama quoted Housing Minister Abdul Rahman Dahlan as saying that a minimum property purchase price of RM1 million (US$300,400) for foreigners is also being studied.

"Both the proposals of higher RPGT and minimum purchase price for foreigners are expected to further dampen the sentiment towards property purchase," Hong Leong Investment Bank said in a research note on Wednesday.

"Any correction in the property prices could further affect consumer spending through negative wealth effect," the broker added.

Property stocks such as UEM Sunrise and Mah Sing Group that are exposed to the high-end and luxury segments targeted by property speculators, were down 4.15 percent and 2.84 percent respectively at 9.42am.

- Reuters