(Prime Minister’s speech on property sector)

Goods and Services Tax (GST)

Sale, purchase and rental of residential properties as well as selected financial services are exempted from GST.

Increasing Home Ownership

The recent sharp increase in the prices of houses has affected the ability of the rakyat to purchase houses. In addition, speculative activities have an impact on house prices and can adversely affect the real estate market in the long term.

To increase the ability of the rakyat to buy a house and ensure stable house prices, as well as to control excessive speculative activities, the Government will implement the following steps :

Review Real Property Gains Tax (RPGT).

For gains on properties disposed within the holding period of up to three years, RPGT rate is increased to 30%, whereas for disposals within the holding period up to four and five years, the rates are increased to 20% and 15%, respectively. For disposals made in the sixth and subsequent years, no RPGT is imposed on citizens, whereas companies are taxed at 5%.

For non-citizens, RPGT is imposed at 30% on the gains from properties disposed within the holding period of up to 5 years and for disposals in the sixth and subsequent years, RPGT is imposed at 5%.

Minimum Price For Foreigners

Increase the minimum price of property that can be purchased by foreigners from RM500,000 to RM1,000,000;

Price Transparency

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; and

Developer Interest Bearing Scheme (DIBS)

Prohibit developers from implementing projects that have features of Developer Interest Bearing Scheme (DIBS), to prevent developers from incorporating interest rates on loans in house prices during the construction period. Therefore, financial institutions are prohibited from providing final funding for projects involved in the DIBS scheme.

To further increase access to home ownership at affordable prices, an estimated 223,000 units of new houses will be built by the Government and the private sector in 2014. The Government will allocate RM578mil to the National Housing Department (JPN) for the implementation of Program Perumahan Rakyat which involves the construction of 16,473 housing units. In addition, JPN will construct 600 units for Program Perumahan Rakyat Disewa and Perumahan Rakyat Bersepadu with an allocation of RM146mil.

PR1MA will provide 80,000 housing units with an allocation of RM1bil. The sales price of PR1MA houses are 20% lower than market prices. Meanwhile, SPNB will build 26,122 units of affordable houses, comprising 15,122 units of affordable houses, 3,000 units Rumah Idaman Rakyat and 8,000 units of Rumah Mesra Rakyat. The Government will introduce a new category of Rumah Mesra Rakyat, with sales price between RM45,000 and RM65,000 for which the Government will provide a subsidy between RM15,000 to RM20,000 per unit.

The Government will also introduce the Private Affordable Ownership Housing Scheme (MyHome) as a step to encourage the private sector to build more low and medium-cost houses. The scheme provides a subsidy of RM30,000 to the private developers for each unit built. Among the criteria for the scheme are:

• Build at least 20% low-cost houses and 20% medium-cost houses in a housing project;
• The maximum price of low-cost houses is RM45,000 and medium-cost houses is RM170,000;
• The minimum built-up area of low-cost houses is 800 square feet and the medium-cost houses, 1,000 square feet, with a minimum of 3 bedrooms and 2 bathrooms;
• Provide parking, surau, hall and recreational park; and
• Open to first-time buyers with a monthly household income of RM3,000 for low-cost houses and a maximum of RM6,000 for medium-cost houses.

Preference will be given to developers who build low and medium-cost houses in areas with high demand and limited to 10,000 units in 2014. The scheme is for housing projects approved effective from 1 January 2014 with an allocation of RM300mil under the supervision of Ministry of Urban Wellbeing, Housing and Local Government.

Currently, PR1MA housing projects, housing in newly opened areas and 1Malaysia Civil Servants’ Housing Programme are eligible to apply for grants at 10% of the project cost, from the Facilitation Fund. For 2014, the Government will provide a total of RM4bil to the Facilitation Fund as an initiative to promote private, high-strategic impact projects.

Of this, I propose that RM1bil is allocated to the Housing Facilitation Fund under Public Private Partnership Unit (UKAS). Developers who receive this grant must abide by the terms and conditions as well as the sales prices which are set by the Government.

The Government will also carry out a refurbishment program and improve comfort and beautify government-owned low-cost housing. Among the measures to be implemented include lift maintenance, repainting the house, cleaning up drains and landfill space and repair playgrounds.

To this end, a sum of RM100mil will be provided to 1Malaysia Maintenance Fund under the Ministry of Urban Well-being, Housing and Local Government. The Government will also allocate RM82mil to rehabilitate 20 abandoned housing projects involving 8,197 houses.

To further strengthen the real estate market and increase opportunities for the rakyat to own houses, the Government will implement a more effective and comprehensive approach. In this regard, I am pleased to propose the establishment of the National Housing Council to develop strategies and action plans in a holistic manner; coordinate legal aspects and property price mechanism; and ensure provision of homes in a more efficient and expeditious manner. The Council members will comprise Federal Agencies, State Governments, the National Housing Department, PR1MA, SPNB and the private sector.

Source: StarProperty.my

It is not fair to compare property prices in Penang with those in Singapore and Hong Kong, says CA Lim & Co’s principal Lim Chien Aun.

“No doubt among the cheapest in the region, Penang, however, is not a financial centre like Singapore and Hong Kong, where there is substantial expatriate population to support high-end properties.

“Furthermore the foreign participation in the local property market is less than 8%,” Lim said, on the frequent comparison of property prices in Penang with Hong Kong and Singapore.

On the speculative nature of the Penang property market, Lim said as the return-on-investment (ROI) was not attractive in Penang, most investors buy properties for capital appreciation reasons and not for rental yields.

“In other words, the Penang property market is very speculative in nature,” he added.

In view of the high pricing of residential properties in Penang, the sub-sales market has now become important, said Raine & Horne Malaysia director Michael Geh.

He said more people were going after secondary property because of the pricing which ranged between RM72,000 and RM350,000.

Geh said strategically located affordable apartments with built-up areas of 700sq ft to over 800sq ft such as the Serina Bay in Sungai Pinang were now selling for RM350,000, compared to RM130,000 in 2005.

“Some apartment projects like the Symphony Park in Jelutong and Ocean View in Sungai Pinang have appreciated respectively to RM400,000 and RM380,000, compared to RM130,000 and RM150,000 when they were first sold in 2000 and 2001, due to their strategic locations,” he said.

The Ocean View units have built-up areas of 870sq ft, while the Symphony Park units are 730sq ft.

“On the island, the sub-sales properties are found largely in the south-west district and in Seberang Prai,” said Geh.

“The problem, however, is with the limited sub-sales supply, as there will be many who are also unwilling to sell at the sub-sales price.

“There are also no reasons for them to sell. If they were to give up their homes below the market price, how are they going to take up another home?”

Ideal Property Sdn Bhd chief executive officer Datuk Alex Ooi said the group planned to develop 2,000 units of affordable properties priced around RM200,000, RM300,000 and RM400,000 in Bayan Lepas next year.

“These will take three years to increase. We will plan more of such affordable homes in the near future on the island,” he said.

Penang Town and Country Planning and Housing committee chairman Jagdeep Singh Deo said the state government planned to deliver eight affordable projects comprising 20,000 housing units, three on the island and five in Seberang Prai.

“These properties will be priced between RM72,000 and RM400,000.

“On the island, the location for the projects are in Jalan S.P. Chelliah, Teluk Kumbar and Jelutong.

“In Seberang Prai, the sites for the projects are Kampung Jawa Butter-worth, Ampang Jajar, off Jalan Be-rapit, Bukit Juru and Batu Kawan,” Jagdeep said.

In 2012, according to the National Property Information Centre (Napic), total transactions of residential properties in Penang fell by 23% to 23,266 from 30,674 in 2011, while the total value of transactions was down 7.5% to RM7bil from RM7.7bil in 2011.

Source: StarProperty.my

The Malaysian Institute of Economic Research’s Q3 residential property survey saw its residential property index (RPI) fall to the lowest level in four quarters but still staying above the 100-point demarcation level at 118 points.

It said this suggested confidence in property remained, but was trending downwards and implied cautiousness in the months ahead.

“The latest reading is pulled down primarily by builders’ expectations of production and sales for the near term. Their assessment of present conditions is also generally less encouraging than in the previous quarter, except for current production,” MIER’s survey report said.

However, MIER said sales continued to hold their own in the quarter.

It said 41% of respondents described their sales as satisfactory and 38% as good, with just 21% responding negatively.

While demand for bungalows has slowed down, landed properties have generally remained popular. Double-storey houses are cited as the best-selling type, with 52% of respondents confirming this, while 31% cited single-storey houses and 7% condominiums.

More houses were constructed in Q3.

“About 31% of correspondents built more homes in Q3, the highest proportion tabulated in nine quarters, representing a whopping 72% jump quarter-on-quarter,” MIER revealed.

It said while this may be due to the current drawdown in new unsold units, people were also probably buying ahead of expectations of a hike in interest rate. However, new bookings slipped for two quarters in a row, with just 47% respondents reporting more new bookings compared to 50% in Q2.

Property remained expensive, even though fewer respondents increased prices in Q3 (56%) than in Q2 (57%) or in 3Q12 (63%). According to MIER, prices are likely to remain about the same in the coming months.

The survey also showed that while home loan applications had gone up, approvals were down, following the recent cap on loan tenure by Bank Negara from 45 years to 35 years.

Meanwhile, job prospects in the property sector, while still holding their own in the quarter, are showing signs of moderating.

“Not only is there a bigger majority of those who have retained their present staff, those who hired more are also smaller in number – with 86% and 11% being polled respectively, compared to 61% and 39% in 2Q13,” MIER said.

In this quarter, only 3% of respondents have retrenched employees compared to 9% last year, but payroll did not budge much with 69% saying they did not make any adjustment to employee salaries in the quarter, against 25% who did.

“Builders are bracing for a more cautious outlook in the near term. Not only are they adjusting their sales forecast lower, they are also less optimistic about their selling prices – preferring to maintain existing prices for now.

MIER said concerns over the limited supply of foreign construction workers and the recent hike in fuel prices may have weighed on builders’ cost of construction. Unless this hiccup was addressed soon, supply of new residential properties will likely be subdued in the near term.

Source: StarProperty.my

Taman Cassa Maya, a gated and guarded housing scheme by Streamsville Sdn. Bhd. within Sungai Dua township in Butterworth, Penang. It is strategically located with easy access to schools, markets and eateries.

This development comprises 12 units of semi-detached and 115 units of terrace houses.

Streamsville Residence

• Type: 2-storey Terrace
• Land Area: 20′ x 75′ / 20′ x 79′
• Total Units: 115
• Built-up Area: 2,248 sq.ft.

Streamsville Exclusive

• Type: 2-storey Semi-detached
• Land Area: 39′ x 85′ ‘
• Total Units: 12
• Built-up Area: 2,860 sq.ft.

Property Project : Taman Cassa Maya
Location : Sungai Dua, Butterworth, Penang
Property Type : 2-Storey Terrace & Semi-detached
Tenure : Freehold
Total Units : 127
Developer : Streamsville Sdn. Bhd.

There is no reason to believe that Malaysia has seen the formation of an asset bubble that is about to burst, as the country has addressed many of the issues and risks related to it, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz (pic) has said in a Bernama report.

She said three series of macro prudential measures had been introduced this year to avoid the very risk of the formation of such a bubble asset.

“Conditions between now and in 1997/1998 are different. We are now on a growth path,” she told a press conference in conjunction with the South East Asian Central Banks (Seacen) 30th Anniversary Conference on Greater Financial Integration and Financial Stability and launch of the Seacen Financial Stability Journal, here yesterday.

She was responding to a question on whether Malaysia was experiencing an asset bubble that would burst if China’s economy tumbled and as global interest rates rose, as reported recently by the foreign media.

“We believe that credit growth has moderated to a sustainable pace that supports the growth of the economy. In this regard, we continue to monitor conditions,” Zeti added.

Meanwhile, in her opening address at the conference, Zeti said the modernisation of the Asian financial system had been accompanied by a significant strengthening of the regulatory and supervisory frameworks.

“These reforms supported the transition towards more market-oriented financial systems that are anchored in stronger institutions, risk management capacity and governance,” she added.

She also said these developments continued to support the region through the recent episodes of turbulence in the global financial markets.

“The region has also made important strides in enhancing monetary and financial cooperation arrangements to address regional financial stability issues and global policy spillovers.

“Much has been accomplished in the areas of surveillance arrangements, financial safety nets and crisis prevention, management and resolution,” she added.

Source: StarProperty.my