Budget 2015 measures too small to spur property market

Property News/ 13 October 2014 Leave a comment

The Malaysian Institute of Estate Agents (MIEA) is disappointed with Budget 2015, as the measures announced are too small to have an impact on the property market, said its president Siva Shanker.

“I am disappointed with the announcement. The budget during the last two to three years only managed to reduce transactions. More should have been done…the measures are too small to have an impact on the market. Thus it will be business as usual and prices will continue to increase,” he told SunBiz.

Siva said one of the issues that the government did not address in the budget was investor clubs, which has distorted and damaged the property market badly.

He said there will be further pressure on the market when those who bought via investor clubs to “flip” the property at a higher price try to sell the units in a market where buyers cannot afford.

However, Siva lauded the government’s move in helping the youth and first-time house buyers with the Youth Housing Scheme, more units to be built under 1Malaysia People’s Housing Programme (PR1MA) and extension of the 50% stamp duty exemption.

The government extended the 50% stamp duty exemption on instruments of transfer and loan agreements and increased the purchase limit from RM400,000 to RM500,000. This exemption will be given until Dec 31, 2016.

“I think the stamp duty exemption is a great idea but there must be a mechanism in place to make sure the buyers are really first-time home buyers,” he said.

Siva said the exemption should be made available only for first-time property buyers to avoid abuses. For example, a person who has bought five commercial properties but yet to buy his first home, although it is unlikely, should not be eligible for the exemption.

“It should be limited to those buying their first property and first home, for own occupation,” he added.

On the Youth Housing Scheme, which is a smart partnership between the government, Bank Simpanan Nasional, Employees Provident Fund and Cagamas, Siva said it is a good move but the 20,000 units available is too little.

“I’m sure there are more than 20,000 married youths who have yet to buy their first home. They should increase the amount,” Siva said.

The government also announced an allocation of RM1.3 billion to build 80,000 units under PR1MA and raised the ceiling of household income from RM8,000 to RM10,000. A Rent-To-Own scheme will also be introduced for individuals who are unable to obtain bank financing.

“This is a good move but 80,000 is not enough. My worry is the implementation, that people who don’t need it will buy it. There must be a fool-proof system to avoid abuse. Enforcement and vetting process must be thorough, to reserve it for those who really need it,” he said.

Meanwhile, Zerin Properties CEO Previndran Singhe said overall, the budget is positive for the property market as it includes affordable housing and infrastructure.

“Infrastructure investments such as LRT 3 will be fantastic for Shah Alam and Klang while the Second MRT Line from Selayang to Putrajaya will be good for Putrajaya estates. Prices in the area will increase. Affordable housing measures are commendable and the income tax reduction in conjunction with the goods and services tax (GST) coming in is also good,” he said.

“We would have liked to see more stimuli for the primary market but overall the measures are good,” he said.

However, he cautioned that house prices will still increase as residential properties are still classified as exempt under the GST, which means developers are not entitled to any refund on their input tax.

“House prices will still go up because there is no way the developers can absorb it,” he added.

Source: The Sun Daily

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