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In Budget 2015 wish list, homebuyers’ group seeks higher price ceiling on urban houses

October 10th, 2014 2 comments

It is widely acknowledged that property price in the Klang Valley, Penang, and Johor are much higher compared to other places.

As property prices in Malaysia’s urban centres keep spiralling up, the country’s House Buyers Association (HBA) urged the government to raise the cap for affordable housing to RM400,000 in its Budget 2015 today.

With places like the national capital and other urban centres like Penang, Johor Baru and the Iskandar region in Johor attracting more workers, the HBA said the current price cap of RM170,000 for medium-cost homes was just too low to count as realistic prices under the government’s definition of affordable housing.

“To reach a greater market segment, HBA recommends that the government increase the price limit for medium-cost housing to RM400,000 in order to capture a larger segment of the rakyat which comprises the low and middle-income segment,” HBA honorary secretary-general Chang Kim Loong told Malay Mail Online this week.

He noted that the government budget last year gave incentives of RM30,000 for each medium-cost and low-cost house built by developers, with the price of low-cost houses capped at RM45,000.

“Additional incentives that can be given to developers to build affordable housing are [to] fast-track approval, lower conversion premiums and fast-track approval for unsold Bumi quota units,” said Chang.

He noted that property prices in the Klang Valley have been rising annually between 12 and 15 per cent for the past five to eight years, which he said was unaffordable for young people.

“An ideal range would be between, say 6 per cent to 8 per cent, which is higher than inflation but can allow annual increase in salaries and wages to catch up,” he said.

For Budget 2015, HBA also called for the 7 per cent Bumiputera discount to be limited to private residential properties costing RM500,000 and below, as well as to limit the discount to a maximum of two properties for a single buyer.

“This price cap can be further fine-tuned from state to state and urban and rural areas as it is widely acknowledged that properties in the Klang Valley, Penang, and Johor are much higher,” Chang said.

“The type of property should exclude luxury homes such as bungalow homes, semi-detached homes and penthouse condominiums or apartments. This would mean that only link-homes and condominiums or apartments, which cater to the masses and less affluent buyers will be eligible for the Bumiputera discount and ensure that the Bumiputera discount reaches the right target market,” he added.

He also said commercial properties should be excluded from Bumiputera discounts, noting that other government agencies like the Council of Trust for Indigenous People (MARA) and the Malaysian Investment Development Authority (MIDA) were better equipped to assist Bumiputera entrepreneurs.

HBA further urged Putrajaya to double the floor price for properties in the Klang Valley and its growing satellite towns of Kajang and Semenyih that foreigners can now buy from RM1 million to RM2 million.

The group also asked for the same to be imposed on properties in the land-strapped northern state of Penang as well as to cities to the country’s south, namely Johor Baru and the Iskandar region near Singapore, the latter which is drawing expatriates looking for cheaper alternatives to homes in the island republic.

“Foreigners must be prevented from buying up property meant for the middle-income rakyat. This is especially true for development corridors such as Iskandar Development which has seen foreign purchasers arriving in droves and sweeping up properties with their superior exchange rate,” said Chang.

HBA’s wishlist for Budget 2015 also includes increasing the stamp duty for the third and subsequent properties bought, to help curb property speculation.

Chang said the stamp duty for a single buyer on his third property should be set at a flat rate of 5 per cent of the property value, 7.5 per cent for the fourth property and 10 per cent for the fifth and subsequent property.

“HBA’s proposal will not penalise the majority of the rakyat who can only afford to buy two properties,” he said.

Source: The Malay Mail Online

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New PR1MA scheme likely to be introduced under Budget 2015

October 9th, 2014 2 comments

Those buying homes under the 1Malaysia People Housing Programme (PR1MA) will save money in a scheme to be introduced under Budget 2015.

The scheme, expected to be an­nounced with the Budget tomorrow, will see the Government “subsidising” a portion of the interest rate for the home loans.

Details of the scheme are still being worked out but it will provide some form of financial relief for the buyers, according to sources.

“Based on previous schemes for affordable homes, the Government subsidises up to 2% of the interest incurred and is subject to a minimum rate. There could be a similar incentive for this scheme.

“This is to make it easier for the housebuyers to get approval for the loans and to minimise their hardship in the event of a hike in interest rates,” said one source.

Housing loans now range between 4.39% and 5.85% based on the base lending rate (BLR) of 6.85%.

More than 700,000 Malaysians have expressed interest in PR1MA, with 500,000 affordable homes to be rolled out by 2018 under the Government initiative.

In the Klang Valley, a PR1MA home would be priced between RM350,000 and RM400,000, with prices in a lesser urban area starting from RM100,000.

Introduced in 2011, the programme targets urban areas where an individual or a family earns a combined household income of RM2,500 to RM7,500 monthly.

The scheme is likely part of the rent-to-own (RTO) scheme for prospective house buyers unable to secure housing loans from financial institutions, that was announced last month.

This will enable these Malaysians to each own a house by paying rent on the property for 20 to 30 years, towards eventually owning it.

PR1MA is working with several banks to offer the RTO scheme.

PR1MA from launch till now

Perbadanan PR1MA Malaysia declined to confirm the scheme but said that it was developing several financial packages.

“An announcement will be made in due course,” the company said in an e-mailed statement.

Many housing industry players praised the plan to give middle-income Malaysians a helping hand with owning a home.

“Housing affordability tops the list of public concerns, more so in urban areas in the Klang Valley,” said one player who declined to be named.

But some were skeptical that it would be helpful to the intended group.

“For a RM400,000 house, the buyer has to fork out at least RM40,000 for the downpayment and the monthly payment will range from RM2,000 to RM2,400 for a 30-year loan period.

“This can eat up a substantial portion of the buyer’s household income, more so with the recent price hikes,” said another industry player who also requested anonymity.

Several potential housebuyers were also skeptical and were worried that the quality of the houses would not be up to the mark.

Others were deterred by the condition that PR1MA house owners cannot sell off the property for at least 10 years.

Source: StarProperty.my

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Customs Dept: GST to have minimal impact on home prices

October 7th, 2014 4 comments

The Goods and Services Tax (GST) will only have an impact of between 0.5% and 2% on housing prices, assuming there is no change in supply and demand conditions, according to Customs Department GST director Datuk Subromaniam Tholasy.

Subromaniam said the worry that the GST would result in drastically higher property prices was unfounded.

“Assuming there is no change in market supply and demand, then the net impact is only between 0.5% and 2%. Developers’ margins are around 30% and this increase can be easily absorbed by them,” he told StarBiz in a recent interview.

Subromaniam said for housing, the biggest expense was due to land cost, which does not incur a 6% GST rate.

Currently, input materials have a 5% and 10% tax rate under the Sales and Service Tax (SST), such as floor tiles, pipes, fittings and paint.

“Even paint now has a 10% sales tax. But bear in mind, it’s not 10%. It’s 17% to 18% because of the cascading effect of the SST,” he explained, adding that the cascading effect referred to the hidden costs accrued down the supply chain.

He said once the GST came into effect, there would strictly be a 6% tax rate on such materials, resulting in some savings.

Subromaniam said what would be newly taxed under the GST would be materials such as cement, bricks and steel, as well as construction work by contractors.

He said that foreign labour, interest costs, government fees and staff salaries were zero-rated, meaning a 0% GST rate.

He said architectural, legal and professional services would remain status quo at 6%.

As for the 6% tax on the construction work by the contractors, Subromaniam said it would depend on whether developers outscourced the work.

“If the developer does it, then it does not incur any GST,” he said.

There are three types of tax categories under the GST – standard-rated, zero-rated and exempted.

Consumers only pay the 6% tax for the standard-rated category, while retailers, wholesalers and manufacturers are allowed to claim the GST incurred.

For the zero-rated category, retailers, wholesalers and manufacturers can recover their costs, but the consumer is taxed a 0% rate.

However, retailers are not allowed to claim back the GST incurred under the exempted category, while no GST will be imposed on the consumer.

Source: StarProperty.my

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Webinar: Penang Property Market Trends

October 6th, 2014 12 comments

by Ken Lim

Interested know more about what is actually happening on the ground in Penang’s property market?

This webinar will covers the market analysis of the Penang residential housing sector and provide the insights about trends, price movement, demand and supply. It is based on the engagement in PenangPropertyTalk.com and the reports from NAPIC (National Property Information Centre).

During the webinar, you will learn about the overview of the Penang residential market trends, some of the top developments and hotspots.

Market Summary

  • Overall property price stable quarter on quarter
  • Value / Translation continues to be in the uptrends
  • Consistent market growth in mainland
  • 24,000 new condo supply in the Island by 2018.
  • Gradual new housing supply for mainland
  • RM600k – RM800k sweet spot in the next 3-5 years.
  • Strong growth in SPT due to its good connectivity.

>> The market analysis in this webinar is purely personal view and opinion, backed by the data from NAPIC (National Property Information Centre) and more than 100,000 monthly visits in PenangPropertyTalk.com. Should you have any question or feedback, please do not hesitate to send them to ken@penangpropertytalk.com.

– Ken Lim
(Founder and Principal Reviewer, PenangPropertyTalk.com)

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Help buyers, banks urged

October 6th, 2014 No comments

Full list of Penang's affordable housing projects

Commercial banks should be roped in to help the poor obtain loans for affordable housing.

Penang Housing, Town and Country Planning Committee chairman Jagdeep Singh Deo said the Federal Government should have a ‘speedy’ solution to solve the high number of loan applications which are rejected.

Commenting on Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan’s statement recently that the idea of forming a Housing Bank was mooted at the National Council on Local Government meeting chaired by Deputy Prime Minister Tan Sri Muhyiddin Yassin on Sept 18, he said it could be a ‘laborious’ process to form such a bank as it would involve a lot of legal issues.

“While we welcome such a move, there is a need for immediate solution to the high rate of loan rejection, which is more than 60% and the commercial banks could be in the best position to help,” he said.

Jagdeep said it did not make sense to build affordable houses if most of the buyers could not obtain loans from banks.

“The state government is stringent in vetting house applications as only the deserving ones are given approval.

“However, if they do not get loans it defeats the purpose of building these affordable homes,” he told a press conference.

Banks, he said, could loosen certain conditions to help approve loan applications and the Federal Government could instruct the banks to do so as it is only a policy issue which could be effected sooner compared with the setting up of a Housing Bank.

Real Estate and Housing Developer Association Penang chairman Datuk Jerry Chan, who was present, said banks need not worry that house buyers could default on their loans as the affordable housing is offered to buyers at a ‘reduced’ rate compared with the market price.

“The house will definitely appreciate over time and banks need not conduct ‘forced sale’ during auction,” he said.

Source: StarProperty.my

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