Focus MALAYSIA
THE WEEK OF DECEMBER 21 –
DECEMBER 27, 2013
Review 2013 / Outlook
2014 --
By: FocusM
 |
| CHANG KIM LOONG National House Buyers Association (HBA) honorary secretary-general |
How did the
year pan out for the property sector?
It was another good year
for the key players in the property market, i.e. developers and banks. Property prices continued the uptrend mainly
because of the ill advice given to our prime minister, resulting in ineffective
measures announced for Budget 2013, such as the real property gain tax (RPGT)
and high threshold for affordable housing.
Budget 2013 imposed a
RPGT of 15% (from 10% in 2012) if the property was disposed of within two years
of purchase. What the RPGT in Budget
2013 meant was that speculators could continue to purchase properties from
developers on launch, then flip these properties over on completion (after 2
years), and pay only 10% (i.e. within the third and up to the fifth year).
We are glad that finally
the prime minister has realised the seriousness of the situation and has
increasing the RPGT in Budget 2014 to 30% if the property is disposed of within
three years of acquisition; and an imposition of 20% if the property is
disposed of within the fourth year, and 15% in the fifth year.
Under Budget 2012,
housebuyers with a household income of less than RM5,000 a month were exempted
from making the 10% downpament on properties costing less than RM220,000. Budget 2013 has raised the household
threshold to a RM10,000 combined income and property prices to RM400,000.
With the ever increasing
cost of living, although a typical household income of RM10,000 could qualify
for housing loan of RM400,000, the household will be left with little or no
savings or any funds for emergencies after paying typical household expenses
and said monthly loan instalments.
What are your
expectations for the sector in 2014?
HBA hopes the (Budget
2014) measures will slow speculative activities in the property market which have
driven up prices to levels no longer deemed affordable to the majority of
lower- and middle-income wage-earners which form the bulk of the population.
We also hope the
government will continue to monitor the situation and take additional measures
such as to increase entry costs in the form of higher stamp duties for
the transfer of titles for people who hold / buy multiple properties, as such
measures are deemed more effective and can yield more immediate results.
What do you
think will be the key events and challenges that will shape the sector’s
prospects next year?
The challenge for the
government in 2014 and beyond is to create a sustainable property sector. For too long, the government has adopted a
laissez-faire approach and left it to the market to regulate itself.
The problem with this
approach is that the two key players in the property market – banks and
developers – are profit-maximising entities.
Hence, property prices have skyrocketed in recent years due to
aggressive lending and speculative activities.
Property in many urban and suburban areas is no longer deemed affordable
to many lower- and middle-income families and especially to our current younger
generation.
Key Challenge No. 1 – Constant monitoring
to curb speculative activities
Vigilant monitoring is
important to gauge the effectiveness of measures in Budget 2014 in tackling the
steep rise in property prices and to take additional measures if necessary.
Immediately after Budget
2014 announced the DIBS would be banned, it was reported that some innovative
developers would try to repackage the DIBS into another product called the “Developer
interest Subsidy Scheme”, in which the purchaser would be reimbursed the
interest charged by the banks on, say, a quarterly basis. This is nothing but blatant attempt to
repackage old wine in a new bottle.
Hence, Bank Negara Malaysia
It is imperative we do
not detract from the roadmap to the 10:90 system proposed by HBA in
which only 10% of the purchase price is paid on the signing of the SPA and
the balance 90% is paid only on the successful completion of the property
purchase. Under the 10:90 scheme,
developers cannot finance projects from progress billings and must use either
internal funds or project financing from banks.
Key Challenge No. 2 – Creating more
affordable homes
There are simply not
enough affordable properties for lower- middle-income groups. By affordable, we are talking about a range
from RM150,000 to RM300,000.
We note that the prime
minister announced a subsidy scheme of up to RM30,000 to private developers to
build more low- and middle-cost housing.
The maximum price of low-cost houses is set at RM45,000 and that of
medium-cost houses is set at RM170,000.
It is hoped that private developers will take this initiative and build
more affordable houses for the low- and middle-income segments. We hope the threshold for middle-income
properties can be raised to say RM300,000 to capture a wider segment of the
population and to encourage more developers to participate in such a scheme.
Key Challenge No. 3 – Safeguarding
interests of housebuyers
The government has
previously announced a roadmap from the current sell-then-build system to
build-then-sell 10:90 system (BTS 10:90).
Under the sell-then-build
system, developers are allowed to sell their property without having to
construct anything and then charge the housebuyer as the property is being
constructed. However, if the project is
delayed or abandoned, it is the housebuyer who bears the full brunt of such a
catastrophe.
Under the BTS 10:90
system, the housebuyers needs to pay only a 10% downpayment on signing the SPA
and the balance 90% will be paid only on the successful completion of the
property, together with certificate-of-fitness and ownership papers i.e. the
title deed. Hence, the interests of the
housebuyer are secure and he is not exposed to any business or construction
risk.
What areas in Malaysia
The current hot areas
such as Puchong and Kota Damansara are already far beyond the reach of our
younger generation, particularly fresh graduates.
No comments:
Post a Comment