KUALA LUMPUR: Budget 2014 has placed a ban on Developer Interest Bearing Scheme (DIBS), a scheme that made its way into Malaysian property market in early 2009. Since its emergence, DIBS has made it convenient for property speculators to invest in new launches. They disregard the hassle of subsale market that has a slightly more complicated payment scheme. However, the recent DIBS abolishment could be the game changer in property market buying trend.
While DIBS is thought to be beneficial by those who genuinely wants to own a home, it also created an opportunity for property speculation. Before this, property speculation was an activity affordable only to those with deep pockets. However, DIBS's easy payment scheme allows speculators to find subsale buyers and sell the property within the construction period or shortly after its completion.
Through this scheme, speculators only have to put forward a small amount of money, while getting a large profit return within a few years.
Therefore, the abolishment of DIBS will certainly dampen speculation activity as the payment scheme will not be as easy anymore. Its effect is exactly as intended by the government. The ban also results in primary market no longer having an edge over subsale market; an area that has been sluggish since DIBS was made popular.
Looking at Propwall's Market Trend, it is evident that primary market is favoured over secondary market. The subsale units at OG Heights in Old Klang Road are transacted below RM400 psf this past year. Meanwhile, Pearl Setia, that has been offering DIBS, is selling at an average of RM550 psf. The take up rate for the new development is claimed to be quite promising.
While primary market certainly has other attributes that adds to its appeal to property buyers, it cannot be denied that DIBS is the factor that draws the buyers in. For the last few years, DIBS has complemented the general rule of thumb when buying property; that is, 'location, location and location'.
Without DIBS adorning the new developments any longer, subsale market is now back in the game.
The good attributes of subsale market will not be overshadowed by DIBS anymore. Those who are still interested in acquiring properties, speculators or not, will broaden their horizon into subsale market since DIBS is no longer an available factor in house selection.
The promotion of DIBS was very strong, sometimes even deceiving, that people overlooked the longevity and good attributes of subsale market. Subsale properties are usually located in matured neighbourhoods with established facilities and amenities. Furthermore, the existing JMC and the neighbourhood’s strong sense of community are the indicators of the quality of the development and its future prospect.
For now, looking into the subsale market may be a worthy option. However, if the Housing and Local Government Ministry decides to implement the ‘Build-Then-Sell’ (BTS) scheme in 2015, the subsale market may very well have to take the backseat once again.