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Sunday October 27, 2013 MYT 12:00:00 AM
Sunday October 27, 2013 MYT 12:54:54 PM
PETALING JAYA: The increase in Real Property Gains Tax (RPGT) will dampen speculation but it is unlikely to stop house prices from escalating and may even lead to a rise, say developers and consultants.
Real Estate and Housing Developers Association (Rehda) president Datuk Seri Michael K.C. Yam said the drastic increase to 15%-30% from 10%-15% previously would discourage any would-be speculator.
“Having said that, I have no strong evidence that speculation was one of the main reasons that pushed up property prices. There were some hot spots but it was definitely not on a nationwide basis,” he told The Star.
Property prices in the sub-sale market, added Yam, could increase if homeowners decided to defer selling to avoid the new tax rates.
The sub-sale market, he said, comprised 70% of residential transactions and a decrease in market supply would be inevitable if homeowners delayed selling.
“This means buyers will move to the new properties market and further increase the demand-supply imbalance there. So, a possible side effect is that it could even move prices higher,” he said.
The flat rate of 30% RPGT for six years on foreign-owned properties, said Yam, would also hurt developers during their promotions abroad.
CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen said the doubling of RPGT to 30% would lessen or stop speculation but that in the long-term, this would only make the market more manageable instead of stopping prices from going up.
However, he said limiting foreigners to buying properties worth RM1mil and above should only be applied to major cities like Kuala Lumpur, Johor and Penang.
Khong & Jaafar Sdn Bhd managing director Elvin Fernandez said increasing the RPGT at this stage would also arrest undue price hikes, which was usual before the implementation of Goods and Services Tax scheduled for April 2015.
Deloitte Malaysia RPGT leader Tham Lih Jiun said property price escalation was due to other factors besides speculation, including rises in construction cost and building materials as well as land scarcity.
However, Johor Rehda branch chairman Koh Moo Hing said the increase in the ceiling price for foreigners was expected to have a “negative impact” on the state’s property market, calling it “not good news” for Iskandar Malaysia.
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Budget 2014, Parliament, Finance Ministry
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