Measures to help lower unsold property units

  • Property
  • Saturday, 12 Oct 2019

File pic shows potential house buyers Jester Ooi (foreground second left) and ST Wan (second right) being assisted by Utopia project property advisor Danish Lim (right) and Jayeinn Goh (left) during the Fair 2019 at Sunway Carnivall Mall in Seberang Jaya. - Starpic by MUSTAFA AHMAD/The Star

THE slew of measures to revive the property sector will help to reduce the country’s stock of unsold units as well as assist the lower-income group with financing, the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS) and other real estate personnel say.

However, industrial sources say some of the proposals should be carefully thought out and their implications considered over a longer period of time.

Malaysia faces two issues – unsold completed housing units and affordability. The residential overhang amounted to 32,810 units as at June 30,2019, valued at RM19.76bil, with condominiums making up 42% of the total value, or RM8.3bil.

The government heeded calls from various sectors to reduce the foreign threshold price from RM1mil to RM600,000 for high-rise units in urban centres.

While PEPS president Michael Kong says this will help alleviate the current overhang situation, it should be coupled with clear Malaysia My Second Home policies.

“We feel there should be more long-term and forward-looking policies with regard to foreign buyers.

“A cap of 30% for each project should be imposed to avoid developments being overrun by foreigners. There should be a different rate of stamp duty for foreigners vis-a-vis the locals.”

Rahim & Co International Sdn Bhd real estate agency chief executive officer Siva Shanker says, “Hopefully, this will not see developers raising property prices to attract more foreign buyers.

“What’s to stop the developer from raising the price of a RM500,000 unit to RM600,000? Or, what’s to stop the government from raising the threshold back up to RM1mil in the next budget?

“These kind of policy decisions need to be carved in stone and not be a temporary fix to suit market conditions. You can’t simply change it when the market picks up or comes down.”

CBRE|WTW managing director Foo Gee Jen says lowering the threshold may create competition for local buyers. “Hopefully, this policy will only apply to unsold units and not new launches. Otherwise, this could create competition for local buyers, since the properties are now cheaper for foreign buyers to acquire, ” Foo says.

PPC International managing director Datuk Siders Sittampalam says, “The lower threshold on high-rise property prices will not have a major impact. It may help the market to some extent but is not a tremendous uplift. At RM600,000, it will have an impact on the middle high-end segment.”

On the real property gains tax (RPGT) being re-pegged from Jan 1,2000 to Jan 1,2013, VPC Alliance managing director James Wong says: “Previously, the base year was 2000. This will reduce the tax burden of the sellers. Let’s say, the market value in 2000 was RM1mil. In 2013, it was RM2mil. The owner sells it at RM3mil. Had the government not moved the base year, the seller would be taxed on the RM2mil gain.

“With this change in base year to 2013, the seller would be taxed for the RM1mil gain. This will reduce the tax burden considerably because there was a massive rise in price in 2013, ” Wong says.

He says it is really not possible for the government to remove the RPGT post-Year 5 because it was just implemented a year ago.

On the RM3bil government allocation in a RM10bil rent-to-own scheme for properties up to RM500,000 for first-time buyers in the low-income group, PEPS president Kong says it will help this particular group and balance the rental and sales markets, which is in line with its expectations of a robust property sector.

Under this scheme, the applicant will rent the property for up to five years. The tenant will have the option of purchasing the house based on the price fixed at the time the tenancy agreement is signed after year one.

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