Budget 2014: Property measures timely
PROPERTY consultants and analysts described the proposed new real property gains tax (RPGT) regime and the removal of the developers interest bearing scheme (DIBS) as both timely and much needed in view of the speculation in the property market of late.
All of them agree that the overall budget for the property sector is good and are of the view that the the new RPGT which imposes a 30% tax on gains within the first three years of disposal upon the signing of the sale and purchase agreement coupled with the removal of DIBS will help curb speculation.
The new RPGT, effective Jan 1, 2014, targets individuals and companies. It is a more stringent regime and has more bite than the previous regime.
Says BIMB property sector analyst Law Mei Chi: “Many have expected the RPGT. The impact will be on the secondary market and may slow down transactions. What is good from the budget vis-a-vis the property sector is the removal of DIBS.
“However, the increase in the RPGT might discourage some speculators but the strong holding power (of buyers) due to the low interest rate environment will provide a buffer for speculators to hold a property longer before disposing of it.
“The removal of DIBS may affect many high-end developers.”
Another analyst who declined to be named said he was “pleased” with the propertymeasures in the sense that they were “lower than expected”. “At least there was no reduction in the loan-to-value (LTV) ratio to 60% or a rise in stamp duties,” he explained.
As for the removal of DIBS, he said he was not at all worried about that impacting developers negatively, as “they (developers) can still circumvent (the removal) with rebates.”
Meanwhile, the Association of Valuers, Property Managers, Estate Agents & PropertyConsultants in the Private Sector Malaysia (PEPS) publicity chairman James Wongsaid the new regime was a more effective anti-speculation tool. The previous regime involved a 15% tax in the first two years of disposal.
“Property is a long-term investment and this new regime actually promotes long-term investment among investors and, at the same time, also helps to prevent excessive speculation,” Wong said.
“Government revenue will also increase. In 2011, the revenue received from RPGT was RM1.24bil and this involved a tax of 10% for the first two years.
“In 2012, RPGT revenue is estimated to be between RM1.5mil and RM2bil. This increase will help to bring more revenue to the government,” Wong said.
Wong said the 5% tax on companies and non-citizens was also significant as it involved disposal from the sixth and subsequent years.
“This will stamp bulk buying by foreigners with speculative intentions. However, it will also affect Iskandar Malaysia, if there is excessive speculation there but on a longer time, it will bring confidence into that market. In the interim, there may be a slight slowdown in sales but in six months to a year, it will self-correct.”
Source: StarProperty.my
With RGPT the price of house wont drop because sellers will add the 30% 20% or 15% on top of the selling price pass on to new buyers, so don’t be happy. The only way to curb and make property price drop is not depend on RGPT but depend on the all the new buyers, don’t buy 2nd hand subsale then the price will drop to rock bottom. Buyers you decide for your faith.
sound like expert. but bullshit only.
The limited supply for prime location is the main factor for high property price. For non-prime city, you can get bargain house with big land. Everyone know that Penang Island has limited land bank, and if you not grab it now, it will be no more in future. Same to Raja Uda area, where the landbank is pretty limited. For places with big land available, eg: Kepala Batas, Simpang Ampat, there is less new project launch, thus the limited supply may push up the price a little bit.
Flood the market with more supply in prime location like PR1MA will help curb the price. When speculator holding it for 5-10 years and no people ask for it, you will let it go with lower price tag.
Now aso ppls dont want buy bcis the price already 10 % of actual market price, want to add anothet 30% , u sendiri beli ok.
OPR will increase latest by next year, if increase 0.25 point enough to shake this market.
Coming soon … Interest rate will have to increase …. the more the better
@Ken
Be careful of what you wish for…..
if household debt keep increasing, sure our government will do something
@Tan
The gov has already done many things to control household debts, which includes tightening of credit and measures to slow down property speculation. It has been timely in anticipation of liquidity flowing back to the west. But they are careful not to overkill. As of now, it is already very difficult to sell a house in Penang. The price is there, but the market is not there. Well, it’s time to pay the mortgages..:D
Very good, let the small time speculators learn the lessons greedy = bad karma, when interest increase another little %, double impact to them then we small time buyers will have good shopping spree for houses. Let wait till March 2014 when QE is eased and all the money flow back to US. Show time !
@Stiff
Yes, you can wait forever but the price of property will keep on going
uptrend.
wah, need to pay mortgages, no instant capital gains, mall business sure kena hit liao!
in Klang valley,when the condo price was RM300k 6-7years ago, people said is expensive, couldnt afford, people didnt want to buy. but now the price gone up to RM800k+, people said better buy now, because it will go up more, msian are that rich?
Cash is king we small time buyers will definitely wait now as the show just began see who is the last man laughing all the way doing house shopping spree.
@Tan
We live in a world of credit today, unlike 40 years ago, when it was almost next to impossible for an average Joe to walk in to a bank to get a half-million ringgit house loan.
Today, if you have a job that pays you RM6000 a month (which is not that difficult to come by), you could easily walk into 5 banks, get 5 mortgage offers, than you choose the best offer…:)
So are Msian that rich? Well, it depends, but credit has been easy that’s for sure!…:)
In order to prevent increase in property price, the RPGT should be at 50% regardless time of disposal.
Previously, I noticed that a country (not too sure is Denmark or Germany) RPGT is very high. Their resident will not invest in property as cost of investment is too high and return is not attractive.
Therefore, the property price are flat at that country.
Why need to be careful, already predicted OPR will increase 0.25 point by next year. So you buyer need to be careful.
that will be germany..
@??
Within 3 years upon signing of S&P or upon OC? If upon signing of S&P, majority of buyer will have holding power I assume.
Let’s see, with no DIBS, the buyer has to start paying the loan interest early on , that means more payments for the buyer to make, and the developer can no longer raise the price to factor in the interest payments in the price of the property in the S&P.
So the property price will be lower BUT with less price on the S&P when the buyer resell the property within 5 years the gov will gain more on the RPGT due to the inflated artificial profit .
So the buyer not only burdened by the interest payments but also by the high RPGT once the property is sold . The longer the buyer hold the property the more payments the buyer has to settle , the amount of the loan interest and the property overhead (the expense of maintaining property) will be large so what profit is there left for the buyer ?
Speculators like to earn quick and easy profit with less hassle and less investment capital involved , but no DIBS and high RPGT will only produce less profit with more hassle and more investment capital needed , those will surely deter many speculators away !
Penang state plan to implement 3% levy foreighner buy property in penang, effective next jan.
@KK
Is Upon “STAMP” on the S&P which make it legal. It will be best if effective upon OC.
@david
PRIOR to 1st April 2007 the RPGT was 30 % for disposal within the first 2 years of purchase and progressively lower for properties sold in subsequent years , speculative buyings in penang at the time was unheard of.
But when RPGT had been set at a 5 % flat rate for properties disposed of within five years of purchase since April 1, 2007, by then speculative buyings started to happen at an alarming rate .
Now at 30 % within 3 years ? Worst than the time before 2007 ! …. Not a good time for any property speculations .
Btw , Developers can no longer rely on bulk purchasers by speculators, but instead the developers must make their properties very attractive enough for genuine buyers to want to buy , so they have to build more quality homes plus more options for genuine buyers to choose from when the bulk purchasers are out of the picture . So all in all I think genuine buyers who have lots of cash will come out a winner with this property measure set up by the gov.
I think it is still to early to conclude right now. Announcement is a good start, but execution and enforcement is key. It was mentioned “Increase transparency in property sales price, where property developers will have to display detailed sales price including all benefits and incentives offered to buyers such as exemption of legal fees, stamp duty, sales agreements, cash rebates and free gifts”.
So I am thinking, would the developers be required to display the kind of discounts given to bulk-purchasers/associates/contractors/directors/contracted bankers & lawyers during the so called “closed door pre-launch” sales?
Will know the impact in six months time, i know many of genuine buyer are waiting for the pricing to be stabilised, they no problem with 10% deposit payment plus tax,stamp duty, lawyer fees, exc,,,,,
Yes, too early to conclude if the measures are effective or not.
Genuine buyers with lots of cash?
LOL…..
The real speculators already made their profits. Those affected will be middle income genuine buyers.
I doubt there will be genuine buyers with a lot of cash. If you have a lot of cash and you want to buy now- you are either stupid or you are not genuine.
@yeahright
Genuine buyers eventually become speculators, lured by the dark side. Anakin Skywalker becomes Darth Vader. Injured speculators retired, replaced by graduated speculators …..he he …. and the cycle and saga continues ..
Well, i think for affordable houses, the measures are not sufficient …..govt should also address and control developers pricing, specification, advertisement/freebies mechanisms, …….cannot let them suka suka increase RM20K everyweek, “sold-out liow”, etc,etc …….there is control the Developer themselves as big fish speculators also.
@??
Not much people buy house for investment in Denmark, but i guess not related with tax issue. My colleague relative stay in Denmark, they got 2 type of housing.
1 is normal apartment with standard size, cost > 1 mil each unit. So worker never affort to buy and rent their rest of their life.
1 is summer house which most people can affort, about 200k only, but you can only stay there during summer, coz their piping etc will freeze during non summer time.
At the end, they dun hv their really permanent house, and they not really care on this.
But in here, most people still wish to become a real owner of the house, even rental might be cheaper than monthly installment a lot, they still think want to own a house.
Eg: buy a unit in Penang now, monthly installment may be 3.5k for landed property. But they willing to rent out their new unit at 1.5k per month.
Why the need to control almost everything in M’sia ? Controlling food
prices,house price, car price and licence.
For housing need of the public, the government of yesteryear and today
failed miserably because they neglected to provide affordable housing
for the people.
The public should be asking the government to build more affordable houses
rather than increasing tax on RPGT. I mean build more affordable houses at
a faster speed to meet the demands. Talk for 2 or more years and when
completed it’s already taken 7 long years to complete 300 hundred units.
During 6 or 7 years period probably many thousands are looking to purchase
a house of their own, can these 300 units meet the demand ?
@Neglected
When you want the gov to build affordable houses , indirectly it means you want the gov to control the prices of the houses to affordable level , so you still like the gov to control house price laa actually .
@yeahright
That was a good one!
@yeahright
You’re totally wrong. You build more affordable houses more than required
for lower and middle income to stabilize the price.
Leave the private housing sector alone, let the free market to determine the
price. You don’t simply control the price in everything just because you failed
to deliver.
i think the cheap borrowing cost is the main factor, Bank Negara should stop the system of adjustment rate – 2.5%BLR gradually, let it be 6.25%, surely the housing price will drop
There are genuine buyers out there who can pay cash hence don’t rely on mortgages to purchase properties , not many but they do exist you know , of course such buyers will wait for the dust to settle first lah since the lower the prices fall the better , they are not in a hurry to buy now . No DIBS means they don’t have to pay the interest payments that the developers add in the prices, so they actually save money laa .
@yeahright
Our main topic is the government is trying to control price of property. DIBS
is not for the rich. So are you saying the government should help the rich by
removing DIBS and you support it ?
That’s why I say the government of yesteryear and today failed miserably in
managing not only the property sector but also automotive industry.
@Tan
House price will not drop first, but borrowing people will die first. If interest go up.
Most of you talking about increase the BLR, u guys talk as if u guys are an expert. Do you know once u lift the the BLR, it will in fact effect those poor people who is taking the loan. Most of the rich one will not be affected and the RPGT is another poor thing to be implemented. Nowadays most of the project here will only be completed after 36 months and i can sd majority of the project will definitely will be completed on the 4th year. As an investor i am not worried as i might as well waited for another year or two since i have the holding power and by then when i sell my unit i dont have to pay any RPGT. There is a flaw in the current planning, and i would sd it failed badly.
@Tan
lousy comment and idea!
@pengemis
Why you say so? in the case of US, their housing price start to drop substantially when the interest rate up. of course it will hurt borrower, but it ensure people not borrowing too much. I will rather choose “low housing price+high interest rate” compared to “high housing price+low interest rate”, unless you are investor/speculator then is different story.
@Tan
u should talk bout something which benefitial genuine buyer, but not proposing something which send all the loan borrower to hell…
The developers keep raising the property prices for every new phase and every launch , so obviously its the developers that are in control of the property prices … what free market are you talking about ? What’s happening in Penang is obviously property market manipulation by the developers !
It does not make sense to flip new properties because it would take more money to buy another new property once you flipped yours, so whatever profit that you make will simply vanish into the new transaction to purchase another new property with similar size but with much higher price . So obviously all the ” speculators ” involved in the new properties are just agents working for the developers to create false demands to artificially raise the prices of the properties !
So with the new measure the gov tries to stop market manipulation by property developers and their agents ( the so-called speculators ) .
@yeahright
The developers keep raising the property prices for every new phase for
every launch DO NOT translate that developers that are in control of the
property prices. If there is no demand, they will not be able to sell.
They keep raising the property prices is because the demand is there. Why
is there such a demand ? Why and what the government can do to stabilize
the price already posted earlier.
Property market cannot be manipulated by the anyone if there is no demand.
You can artificially create false demands and raise the prices of the properties
but how successful will it be ?
Look at “The Wave” and “All Seasons”, how come they take so long to sell out
all their units ? They can easily create false demands and in the blink of an eye
everything sold out !!!. If what you said is right, why haven’t they sold it in a
short time ?
The government is trying to control the hike in prices of property due to its own
failure to deliver adequate affordable housing for the people.
Agreed with yeahright and Tan.
The current property market esp in Png is not free market but speculators market, developers market, greedy market, goreng-goreng market, false market, …….basically manipulated and tempered market. Cheap and easy finance also contribute to this.
That’s why i said the recent measures may not be sufficient for affordable homes. Govt should also address and control developers pricing, specification, advertisement/freebies/promo mechanisms like multiple launches for same project, false claims, monetary reward schemes, “sold-out” tactics, stakeholder scheme,”RM3K only booking”, etc, etc, so that property market is moving towards free market (that depends on real demand and supply) on their prices.
Car price in Msia although is “protected market” (also not free market), at least the regulated price helps in price stability and hence closer to free market (that depend on true supply and demand). Why nobody try to speculate in car price market ?
I know wounded speculators and any developers-friendly agents would not agree with me.
Yes, agreed also govt is failing to provide adequate affordable housing to peoples in the first place, hence, lead to developers (are also speculators) and buyers speculators in-control of house prices. Rich genuine buyers will eventually becomes speculators …..sigh.
Let’s hope and pray …….and see ya ……
@Neglected
The prices of new properties in penang have been inflated to the level of absurdity that the developers don’t have to sell all to be able to gain extraordinary profit from them .
Why would they want to sell all in such a hurry if they could wait a few more years to spike the prices even higher hence gain more profit ? When they just have to wait for the price to keep on rising and rising , so its better to sell later laaa at even more high price to make even more profit !
The developers have long holding power since they are the biggest speculators around so sold out or not matters little to them , that’s why they keep building high end properties even though they are fully aware that the market for such properties are not that big hence impossible to get sold out in a short amount of time . Even though they sell less properties but when they keep raising the prices higher and higher they gain more profit for every properties that they manage to sell .
I personally think the property price will keep going up. With the imposed of GST, all the building material will at least top up 6%, still not counted in the annual inflation yet. I never believed any businesses will do such charity to absorb all these prices. Who wants to do business with no profit?. Furthermore, developer has the holding power. They can always hold and watch, no rush to kick off new projects if they cannot make handsome profit. Just imagine, when buyer has no choices from new project, they sure will need to buy secondary market. Then you will see the demand will come back to secondary market….Buying secondary market property will have to pay extra 30% price now due to RPGT….haiz…..to make the story short, at last consumers will need to pay all these extra taxes at a higher price, cannot run away.
For my opinion, government should build ENOUGH low medium cost houses, not to introduce new taxes with the reason wanted to curb speculations. By introducing new taxes, at the end consumers will have to bear all the cost.
@yeahright
Just come back to the original discussion that had been pointed out :
1. The public should be asking the government to build more affordable
houses rather than increasing tax on RPGT. Build more affordable houses
more than required for lower and middle income to stabilize the price.
2. The government failure to deliver adequate affordable housing for the
people that created more demand than supply which lead to hike in prices
of property.
This is the main reason why price of property tends to go upward or “The
developers keep raising the property prices for every new phase for every
launch” as you put it.
Conclusion: Now that for the 30% tax on RPGT within 3 years, 20% and 15%
on the fourth and fifth years has been implemented, would it be much
cheaper and affordable for the government to provide adequate housing to
the people rather than imposing the tax if the government had done their
part all this while ? How many are able to buy even though with this taxation
implemented ? My bet is the price is not going to come down with this new
ruling !!!!.
Regardless of everything said about taxes and property prices and GST.
It all bores down to the banks and they are tightening. Cheap money is not that easily available anymore. So you can keep pushing the prices up but there won’t be any takers.
It will reach a glut and prices will have to correct to an acceptable level.
It is economics- ups and downs
I also personally think that property speculations is a good thing. Please don’t scold me yet before you finished reading all…
Just look at Hong Kong and Singapore, how many big boss was “born” just because they “goreng property”? A lot!! When this big boss made money from the property, they will use the money to re-invest in other things such as building up their factories, expand their business and etc…This moves the economy isn’t it? Let’s don’t talk about big “goreng”, even small “goreng” can make small money then they spend the money to buy new cars…how about that? Again it moves the economy.
Property speculations by foreigners even one form of FDI, how about that? Foreigners bring money in to buy property here, caltivate the developers , constructions business and also all the supply chain businesses. Isn’t it good? Once these businesses are good, all the people spending power will good, it moves the economy. Morever this kind of FDI does not left toxic waste behind, unlike some of the FDI factories….
However, our government needs to prepare enough LMC housing for the people. For those not ready to enter the “private housing”, they can temporary stay in “government housing”. Once they are ready, with more salary,they can anytime enter the “goreng market” and hopefully can become one of the taikon one day.
As a conclusion, government needs to have ENOUGH affordable housing (government housing) for the rakyat who needed at the same time shall give a room for the speculations to happen in “private housing”…..economy baru jalan mah….haha….. (please pardon my broken english, because I don’t have high education level)
@ROFL
u might think a lot of people not afford….but they might a lot of people still think is cheap…
If the bank offers “expensive” money….those not afford now..lagi not afford then…my personal opinion la…
@pengemis
@pengemis
Before 2007, the home loan rates was above 6%++, but people able to afford a house, but now with the historically lowest interest rate (which inflated the housing price i believe) people not able to buy a house, which one is better? the low home loan rate should only given to single-property holder, not to those multi-property holder who keep buying and selling house to make money.
GST and all tax will just make secondary house market to move forward with price increase. That is for sure.
Based on your explanation here, I think government should increase the RPGT for 70% for the first 3 years,50% for the fourth and fifth years and 25% for more than 6 years. Because according to financial expert here, the price will increase no matter how the government do.
Cooling measures is implement step by step. If the price still going up, the next step will be minimum occupation period, where the owner cannot sell their home within 5 years after getting the OC. I heard this from my friend who work in government sector. And this will create the real demand of the housing sector.
No government can survive if the let the property price uncheck. People who can afford to ‘goreng’ maybe 10% of the population, so the government need to think of this 10% or the rest?
10 years ago, we never heard of affordable house, but now we are moving towards homeless nation. Is all because the developer, investor and speculator. The decrease of quality of life is not good for the society.
Hmm….interesting…:)
10 years ago never heard of affordable home????? Where the heck were you then… This is utter rubbish….
but don’t forget the cronies of ..hhmm.. you know who am I talking about,they are also the big time players, implementation of RGPT OF 70 % will kill them too,with current measure is enough to stop all the grouses of people.cant go further..hehe.
I don’t see RPGT will stop ppl from buying properties.
Banks will become the killer by tightening the lending.
RPGT goes to government ….GST goes to government …..SnP stamping duty goes to government …Developer corporate tax goes to government ….BR1M goes to rakyat….hahaha…think about it…who will help u?
Agreed with yeahright, Tan and NT
Too pity that injured speculators and developers-firiendly buyers still hoping price to continuosly goes up ………
Not all the secondary property price will up, those newly OC obtain or those less than 5 years, the price may up 5% to 10% , not those old property more than 10 year, as we know penang old property maintance is out and having many quality issue, leakage, leasedhold not many ppls want to invest,
From my observation, majority of speculators are not Penangites. They are mostly southern people who likes to makes others lifes miserable. Those speculators are from Ipoh and KL. and we are talking about those who bulk purchase each project, not 1-2 units. Perhaps its the cantonese culture. Just look at Hong Kong .
Those who are hurt and handicapped are those trying to own their very first
house. Speculators if sell now with a tax of 30%, do these people asking for
higher RPGT get a 30% discount ? The answer is a BIG NO !!!!
Dear BM Observer,
Why pity speculators?
I think the issue here is who is going to be affected the most. You need not pity investors as i bet most can shelter the new ruling. You and some here seems to be very happy and hope for the sky to fall on speculators? This is the trait of typical struggler who only know how to blame others for their short coming isn’t it?
Tell you what, i need not a crystal ball to predict you guys ain’t part of the savvy group who knew how to utilize the cheap credit when it’s available. Either you are not qualified or a smart calculative chap who had hold-on before and only to regret now. There’s always winners and losers in all of this development. And the truth is, those who have the foresight couple of years ago to go all out is already a WINNER. Don’t tell me about you la, based on your comments i already know where you all stand. But please don’t blame others for your misery ok.
Now you tell me how the RPGT and the abolishment of DIBS is going to help you get cheaper property? Don’t ask me dear, but I am putting my bet you guys are going to be disappointed hoping for the price to falls…. Also, let say price doesn’t increase and actually fall, what are you guys going to do about it? Maybe buy a couple of units at 5-10% cheaper? Happy? Buying any new prop in 2013 sure ain’t going to be any cheaper than 3-4 years back. Still more expensive lar…… The TRUTH is, those who can afford to buy 3-4 years back would have already bought la… Why make so many noise now….
When credit is cheap you never guys never buy, when there’s DIBS you guys didn’t invest, and now with the tightened ruling you guys so happy? Please don’t make me laugh… Who is the victims we will know very soon…. Agreed?
Hypocrites…. *face palm*
Looks like the developers in penang are adamant to jack up the prices by building more and more high end properties for a very tiny percentage of foreign buyers ( the percentage of foreign property buyers in Penang decreased from 10% in 2010 to 6.7% in 2012 according to Veena Loh , the general manager of estate broker Malaysia Property Inc (MPI) , so how’s that going to help the economy , yoyo ?
You think the remaining unsold and vacant luxury condos and apartments scattered all around penang island going to help provide safe environment for the penangites ?
I tell ya, those vacant and unsold properties are the toxic waste to the society ! The longer those condos and apartments left unattended in the hands of the developers ,the more they will suffer from leakages and cracks ( the earthquakes aint getting better you know ) , hence the more unappealing they will become to potential buyers …. no wonder less foreign buyers would want to buy them ! And with the high RPGT and no dibs , wow there will be no takers for them !
The developers will in the end become hoarders of their own unsold properties , the longer they hold the properties the more dilapidated the properties will become ! And those who have to live next to these vacant and unsold condos and apartments will have their safety to worry about !
exorbitantly high prices , high RPGT , no dibs, with tiny % of local and foreign buyers , so many unsold and vacant properties soon to become dilapidated creating more ghost towns ……. and still some here keep on insisting that the prices ain’t ever going to come down? Give me a break !
Penang property are having problem since beginning of this year, new tax rule started to impact the property price, owner start to cooperate with new buyer to reduce the subsales pricing, last year unit sold fir 600k, six month ago reduce to 580k, now the owner willing to let for 545k.
Mr Soo,i am holding 4 properties, even now I still feel very comfort in bank amortization,
no problem at all, even my units left unattended for 3 to 4 years which I have counted the risk before I bought.
in short, it all depends on your holding power, do not buy and speculate if you can not afford.
Interest raise? settle partial of your purchase, simple as that.
Unattended for 3 to 4 years?!!!
Rental demand is really BAD in Penang.
I just rent out my unit in Tanjung bunga to a foreigner,still have surplus after the bank repayment,you may say I am lucky,have no intention to rent out initially,but need to respect my wife decision and the remaining are used for own stay
@lina
Six month ago reduce to 580k and this is not impacted by the new ruling.
This property should be leasehold. Places like Oasis, Nautilus Bay, Putra
Place and Summerton (New) I don’t give a damn to these leasehold
property.
Got a question:
These new ruling applies only to newly purchased property from Jan 2014? or property sold in 2014?
In other words, lets say if someone bought a re-sale today (sign and stamp S&P in 2013) and sell it off during the first year (lets say in 2014).
Does the property then be subjected to 30% RPGT tax because sold in 2014? or still the current ruling @ RPGT 15% tax becaused S&P stamped in 2013?
@Bryant
Only the broad policy is spelled out in the budget. For the details, they can still tweak to suit current situation before everything is finalized. In fact, they can still revise things as we go, maybe raising RPGT, stamp duty etc along the way anytime to achieve the target of reducing household debts.
Attention to details is not the strength of the powers that be, thats why most policies are broad and in general. Then when the heat turn on, the backpedalling happens. The same cycle thats been occuring for years, sadly, dont see that changing in the near or foreseeable future. RPGT, I predict will go through a few changes from whats been announced recently.
Its true, those leasehold property the spring, putra place and oasis previously sale for 600k now drop 50k.
too many new projects launch not many want to buy overpricing subsale.
Henry Butcher Malaysia (Penang) vice-president Shawn Ong also said the tighter credit conditions would continue to slow residential property transactions in the second half of 2013.
“There is still interest to purchase properties. However, due to the high and unreasonable pricing, property investors are waiting for prices to re-adjust before buying,” he said.
According to the Napic report, there was an existing stock of 367,158 units of residential properties in Penang in the second quarter of 2013, compared with 366,265 units the previous quarter.
Of the 367,158 units, some 40,843 were condominium and apartment units, the report said.
The report said that till the second quarter of 2013, there was an incoming supply of 48,076 units, while there were 45,153 units under construction.
The planned new supply in the second quarter was 46,610 units, the report added.
Geh said the existing stock of residential properties that had been built had increased, compared with a year ago, which meant that the market was spoiled for choices.
“If the incoming supply of properties that have been approved materialised at the same time, there be may be a correction in housing prices.
“Affordability is the key word here. There are many people who are keen to buy properties, but the pricing today falls out of their income range.
“Compounding the problem further is the high rejection rate of housing loans nowadays, which has increased from last year,” Geh added.
But some idiot still argue the price is cheap, Penang property overpricing and oversupply.
The old building look terrible , traffic terrible.
Basic economic theory, land is scarce, hence land is a priced commodity. Demand will continue for Penang Island. Dont see property prices being hit significantly, may be a mild correction. Like any commodity, a correction is bound to happen. When that window of correction is over, it will be business as usual, pricing points moving upwards. Bali island when through a mild correction in the property sector when a couple of man made incidents hit them, but it recovered quickly and prices are still going upwards, similar to Phuket after the Tsunami. Singapore and Hong Kong, prices are still moving upwards, only at a slower pace, but point is, its still moving upwards, despite their respective governments putting in place multifarious measures. Not being a wet blanket, but somehow dont see a major correction in prices for Penang. Island, neither will the window of correction will be a prolong one. Even in your capital, KL, during the Asian economic crisis, property correction only saw a marginal 5%-10% drop in prices in some pockets of the city for a short window, some areas, the prices still maintained, but also during that period, cost of borrowing was higher, hence net net effect for the buyer was marginal or almost zero.
@Bryant
“In other words, lets say if someone bought a re-sale today (sign and stamp
S&P in 2013) and sell it off during the first year (lets say in 2014)”.
This someone bought in 2013 and sell it off in 2014 will be subjected to 30%
RPGT tax. Within the first three years of disposal in the proposed real
property gains tax (RPGT) is effective Jan 1, 2014.
@Bochap
A major correction in property price of say 30% would probably throw our country into a crisis, but not to say that a 30% correction would not move our household income to home price ratio to a more sensible level. So, in order to have a win-win, a policy that stagnants the home price would probably be something we need, until household income increases to such level as to justify for a gradual increase in home price again. For now, taking speculators out of the equation would probably be a good start.
@SiaoLang
That won’t happen. Only happen to those who like to fantasize !!!!.
@Truth
What won’t happen?
Just observed the stupid mudah.com agent start to reduce the property price, same property, reduce 5k each day, trend going down.
Same thing happen three year ago, up up up.
Now down down, dont ask me which property.
To those fantasizing the price is going down, just wait for 30 days to
have 150k cheaper or wait long, long …….
Actually for those flippers, they should know how to do simple maths and decide whether to throw fast at cheaper price, or hold on until RPGT period expires….:) But the issue is, the market in penang has been so dominated by speculative buying in the last few years that it would probably be very difficult to find buyers even at cheaper price. There simply is not that many genuine home buyers in penang….:)
but some greedy speculator still beliave can sold out their unit by add on another 20% to 30% of rptg tax to mark up the price, current price drop became cheaper not many buyer want buy.
Land is scarce ? Excuse me but they are not selling land to buyers , each unit of condos and apartments only have brick walls , floors and ceilings .. no land maa .
A small piece of land can have hundreds of units of properties due to the fact that the developers are maximizing each piece of land by building vertically resulting in the oversupply of new properties in Penang . With the coastal land reclamation projects going on in Penang, land can hardly be labeled as scarce anymore !
Its laughable for you to compare Penang with Phuket, Bali , Singapore and Hongkong ! Phuket and Bali have some of the most beautiful and unpolluted beaches in the world , but Penang beaches are very dirty , smelly and polluted with e-coli ! Singapore and Hongkong are world business centres , the same cannot be said with Penang . Hence Penang properties are not in the same league as properties in those countries . Even the public housing in Singapore “the pinnacle” can be considered as luxury if compared with Penang’s properties ! Geez, Penang airport which is supposed to be the gateway to the world also suffers from flashflood up to ankle level everytime heavy rain , thats how neglected Penang really is , malu laa if keep comparing with those countries .
@yeahright
Malu don’t compare. Each unit of condos and apartments only have brick walls,
floors and ceilings, that’s why they built condos. If land is plenty they would
have built houses.
Penang beaches are very dirty , smelly and polluted with e-coli, that’s why
property here is cheaper than Singapore and Hongkong. It’s going up in prices
as we progress.
Hi jo,
Haha, correction! I think what the greedy speculator meant was they will add another 20% to 30% to cover RPGT, REGARDLESS they can sell or not. If cannot sell, they will hold on to the property, using it as weekend home, public holiday home, mistress home, mahjong home, pang sai home etc….:) Well, it’s their money.
@yeahright
Don’t waste your brain cells debating with people who compare penang to spore and hongkong lah….:D
You have in fact brought up something very interesting, pinnacle@duxton. Our state administrators should buy themselves a few cheap airasia tickets (economy class), fly themselves down to spore, and see how world-class administrators in spore design affordable gov housing in the heart of the city. Want to compare penang to spore & hongkong, I very malu lah!!…:D
Penang is the only place that the owners are willing to subsidize the tenants happily.
Rental return is lower than mortgage interest.
@max
got meh? which project is the rental return lower than mortgage?
if housing price keep going up, you guys think our government will do nothing? if 30%RPGT not enough to cool down the market, then more measure will come. dont ever compare msia with spore and HK, their population density is high, but msia is not, and dont forget that 85% of msian workforce earn less than RM2500/month. the current housing price is not matched with income level, you can raise your housing price 10%, 20%, no problem, but who is going to buy? another rich investor?
@HS
At the end of 2012, Hong Kong’s population figure’s stood at 7,173,900.
Singapore’s total population grew by 1.6 per cent to reach 5.4 million as
of June this year.
The current population of Malaysia in total is 29,791,949. Who is going to
buy? A good question. Those changing to bigger houses, Husband and wife
combine salaries, people from out station posted here for higher post, those
promoted locally and households combine salaries and not forgetting people
from other states buying etc.
@max
You should tell us which property have higher rental yield to morgage interest.
@Truth
You are missing the point Truth.
Johor itself is 3 times bigger than Singapore.
If you want to compare, you should look at household incomes and most people earn less then RM3k a month.
Even if you were to combine incomes that alone is not sufficient to upgrade your house at the current price levels.
Another thing as well, Malaysia is not a financial hub or a preferred destination for FDIs compared to HK and Singapore or Indonesia for that matter.
@Truth
No one is expecting transaction to come to a halt. There are still people buying and selling, but the number of homes coming out into the market from the intense building in the last few years would probably overwhelm the market, considering the number of speculators being taken out of the game (assuming the 30% RPGT is effective in it’s purpose).
in KL and Singapore.
Landed property in PG island costs >$1M with monthly rental $1.5K/mth.
It is <2%/yr.
Condo cost in PG island at $600K with monthly rental $1.5K/mth.
It is 3%/yr.
In KL and Singapore, you can get 5% easily.
Telling the same old story here, everyone aware that Penang rental return are very low, will be lower once more project obtain OC.
Owner now are lucky bcos the foreign worker are renting the place, no foreign worker, most of sq ara batu maung, releu,paya terobong will be empty.
My fren staying in relau area since 2008 till now, the tenant didt increase the rental rate.
Penang property only good for buy, make profit, sell off.
@max
You use the property current market price or the S&P price?
My condo rental yield = 7.3% (S&P price) & 3.4% (current market price)
My landed rental yield = 3.9% (S&P price) & 2.7% (current market price)
The thing is, who care about the rental yield lower than installment? Especially for landed, the appreciation itself is better than the rental return.
@yee
You are right! It is depend on respective investment strategy. If you plan to hold the condo for 5 years, the rental is just a bonus. The target it the gain the appreciate after 5 years. And some could have do it for 10 years, and it is either you left the property empty with zero income during the 10 yrs, or rent it out with 1-2K to cover most of the holding cost.
One more thought. Someone said 85% of ppl earn 2.5K/m can hold the 85% of property. If yes, the house price will continue to go up, and the 85% will have to rent from the 15%. Eventually, rental yield will go up also. If not, house price will drop.
One more thought. Someone said 85% of ppl earn 2.5K/m. Now the property market will go up or down, is depend on whether the 15% of ppl can hold the 85% of property. If yes, the house price will continue to go up, and the 85% will have to rent from the 15%. Eventually, rental yield will go up also. If not, house price will drop.
Whether they can hold or now, is very much depend on the economy, and how much BNM will increase the OPR in near future. RPGT, won’t hurt much.
@Hemsley
Are you forgetting PR1MA?…..:) I heard they are planning something iconic for Penang, some kind of a showcase.
@Hemsley
What max meant was it doesn’t make sense to buy now for rental return, as capital upside is not as optimistic as 5-6 years ago, as well as rental also low, provided again where your property is located and getting a tenant is also another issue considering the number of homes coming into the market. As for the example you gave, I am sure you must have bought the units 5-6 years ago.
In a nutshell, the measures that the gov introduced recently is giving the market a breather. For those who are thinking of buying for own stay, you should enjoy the luxury of time, to shop for the best home. For those who are eager to make money by speculating, eehh…take your time to analyse….:)
@lol
@SiaoLang
“dont ever compare msia with spore and HK, their population density
is high, but msia is not.” @HS
What did HS say ? Who is missing the point ?
The 2012 Household Income Survey found the average monthly income of
Malaysian households rising from RM4,025 in 2009 to RM5,000 in 2012, an
increase of 7.2 per cent annually. What about the higher income group ?
Hello “SiaoLang”, “considering the number of speculators being taken out
of the game (assuming the 30% RPGT is effective in it’s purpose)”,pointed
out by you.
Whom do the speculators sold their property to ? Understand the subject
first then you speak.
@Truth
you point out the important point, with the current market price, your rental yield is 3%++. do you think that is good investment? do you count the loan borrowing cost 4++%? you have bought properties few years ago, you are lucky. but with the current market price, u think still good to buy now to invest?
household income around RM5000, the house they can afford should be not more than 300k(consider the monthly payment RM1.6k). even for those who earn RM10k/month, a 500k house also consider expensive for them.
@Tan
That’s why the idea of PR1MA loh.
@Truth
😀 …There’s no need to be kanchiong lah. Calm down bro!
I would actually like to explain it further, but it might be too wordy….:) But with vacant units everywhere in Penang, I think it will be pretty self explanatory soon…:)
@SiaoLang
You hope for PR1MA? What is the price? When launch? When completed? If you wait for it, how long you need to wait until it complete? And during this time, you will help investor to install their house, and until when? If anything wrong with PR1MA, you turn back to buy a unit from the market, will you get a cheaper or more expensive unit compared to today?
There are too much uncertainty. But for sure one is, PR1MA will be after the GST implementation. By that time, the price could have been adjusted.
@SiaoLang
My thinking is, there are always ppl around need to buy a house. This is demand. And the investor always think far in future (I am not sure about speculator who only want to make quick money). When property becomes more expensive, the rental market will grow. When this happen, it support the property price further. As long Malaysia and worldwide economy is stable as it is now, this will continue to happen.
@Tan
If rental is so cheap, ppl will prefer to rent rather than buying a house. You see the potential those investors see?
@Tan
Just bought Sandilands last month.
i think some they buy for the future Penang too,they are not only investing for their own,wherea,for they next generation.most of all,invest in a place that you like most with no regrets.unoccupied units at night are probably due to the people who have same thought as me.
@Truth
Sandilands was launched back in 2011?
I believe it was only going for RM500/sft for early birds. I was there during the early bird preview.
In 2012. Less than 800K .
@Truth
So, was it last month or 2012? Hehe…just kidding lah. I am sure you know what you are saying. No need to explain…:)
@SiaoLang
You are not well-versed in English. This is not the first time !!! Look up again
at comment #118 and try to understand what has been said.
@Truth
Haha…okok…settle down bro! Don’t get so tensed up lah.
@surrin
Yes, surely you have a whole spectrum of buyers/sellers buying/selling for different reasons. Some buy for speculation, some for own stay, some for children, some for weekend, some for their dogs. Yes, I know a guy who bought a condo beside his residential so that there’s more space for the dog to walk around (it’s a big dog)…:)
So at the end of the day, what the gov is trying to do is to reduce demand side (especially the non-essential demand and foreigners) by introducing hurdles for speculators, and increase the supply side (PR1MA and speculators exiting the market). How effective are the current measures? Well, remained to be seen.
But most important of all, if the gov is serious about addressing the mis-match between mass affordability and home price, they have to monitor closely, and not hesitant to put in more measures to achieve desired results.
@surrin
Whether the price goes up, stay flat, or drop really that’s up to the market, as long as the gov introduces enough measures to keep speculators out and supply enough good quality apartments through PR1MA so that home buyers are not held hostage by land owners/developers…:) That’s something the fed can do for the people. I will refrain myself from criticizing our state admin this time, otherwise my comment would get censored again..*sigh*.
@SiaoLang
Just come back to the original discussion that had been pointed out :
1. The public should be asking the government to build more affordable
houses rather than increasing tax on RPGT. Build more affordable houses
more than required for lower and middle income to stabilize the price.
2. The government failure to deliver adequate affordable housing for the
people that created more demand than supply which lead to hike in prices
of property.
This is the main reason why price of property tends to go upward or “The
developers keep raising the property prices for every new phase for every
launch” as you put it.
Conclusion: Now that for the 30% tax on RPGT within 3 years, 20% and 15%
on the fourth and fifth years has been implemented, would it be much
cheaper and affordable for the government to provide adequate housing to
the people rather than imposing the tax if the government had done their
part all this while ? How many are able to buy even though with this taxation
implemented ? My bet is the price is not going to come down with this new
ruling !!!!.
This RPGT increase and DIBS banned will help to reduce the tooperty speculation,
Just read thestar new property article, this mention for last few year Malaysia businessman to other business and all involved in property became speculator.
Its true, one of my company VP resigned and involved in property market, get to know the person organizing property seminar and many of my frens became member and paying nearly 15k to join this group.
I observed many of the company Engineer resign last 3 years and became Property agent.
Not only businessman, even Engineer start to give up thier job to join property sector.
That are reason why penang having shortage of skill worker and shortage of Engineer.
As we know no new business come to Penang, reason not enough Engineer.
Actually, this RPGT’s strategy which mainly is to scare away the foreign investment to current country.
We dont know how much the detrimental effects will be to Malaysia, but MY is a place which much relies on foreign investment for the country’s growth. Not a real economy package has been stimulated by NJ and it definitely will cause burden to the “ordinary” people and if the situation persist, e.g. one bowl of fried rice – RM10-15, the getting higher living costs and inflation each year pass by, our country will be in crisis…closed economy would not good to anyone….
My advise is RPGT to be slowly implemented, said..from 10% to 15% to see the economy effects, not drastically changed from 10% – 30& after 3 years.
Well, lets see how this wave will ride Malaysia to…..to me, more to cons.