Home Ownership Campaign will help incentivise the market in 2022

AT Budget 2022 last month, property players had high hopes that the nationwide Home Ownership Campaign (HOC), which ends on Dec 31, will be extended into 2022.

However, much to the surprise and dismay of many, the HOC was overlooked.

Rahim & Co International Sdn Bhd real estate agency chief executive officer Siva Shanker says he was surprised that an extension of the HOC was not announced in Budget 2022.

“Following a challenging 2020 and 2021 as a result of the pandemic, 2022 is expected to be a recovery year.

“It is a pity that the HOC was not mentioned and extended into 2022, as the campaign would have been a great way to incentivise the market,” he tells StarBizWeek.

Despite being overlooked in the recent budget, local property consultants and analysts are nevertheless hopeful that an announcement on a potential extension of the HOC will be announced soon.

KGV International Property Consultants (M) Sdn Bhd director Samuel Tan says the HOC has been instrumental in promoting home ownership.

“We are expecting an announcement on the extension of the HOC at least until June 2022.

“It is disappointing to many buyers who hope to purchase their dream houses, now that the pandemic is better controlled. I hope during the budget debate, it will be announced.”

Similarly, UOB Kay Hian also says property players are hopeful that an announcement on the HOC will be made soon.

“While no statement was made on the extension of the HOC during Budget 2022, the industry is expecting the government to announce it before the end of 2021.

“This might induce front-loading purchases into November and December 2021. Coupled with an anticipated rate hike, this may lead to a base normalisation on sales, or potentially a contraction in 2022. Earnings could tail off thereafter,” it says.

An industry observer is less than optimistic about an announcement on the HOC.

“There was a lot of hype about it being announced at Budget 2022. Considering its importance, I believe an announcement would have been made last month.

“As nothing on the HOC was mentioned in Budget 2022, I believe that there will no announcement on it before year-end.”

However, he adds that the government could still surprise the industry.

“This was the case with the vehicle sales tax exemption, which was set to expire at the end of last year. No extension was announced in the budget.

“However, within days of the new year, an extension was announced. So, never say never.”

The government announced the extension of the sales tax exemption via a memo to the Malaysian Automotive Association and the Malaysian Association of Malay Vehicle Importers and Traders last year on Dec 29.

An analyst says the HOC can help to mitigate the overhang situation in the country.

“It won’t solve the problem, but it has helped mitigate the situation. In fact, one of the main reasons the HOC was implemented in 2019 was to help curb the overhang in the country.

“It was a success and was again reintroduced in 2020 to help spur property transactions due to the adverse impact of the pandemic,” he says.

According to the National Property Information Centre, a total of 31,112 overhang units worth RM20.09bil was recorded in the first half of 2021.

This was an increase of 5.2% and 6.2% in volume and value respectively, against the preceding half.

In a statement last month, the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (Peps) urged the government to extend the HOC until June next year to assist potential buyers and help reduce the overhang level in the country.

“Currently, the HOC is only applicable to the primary market. To assist owners in the secondary market, Peps is hopeful that the HOC be extended to properties in the secondary market as well,” it said.

According to PEPS, the secondary market accounted for 60% to 65% of total residential transactions.

“But in the past few years, this has grown to more than 80%. Spurring growth within the secondary market would mean more transactions, which would influence general market sentiment and boost consumer confidence in the sector.

“Furthermore, the secondary market is also a source of houses for potential property owners, including first time homebuyers. By extending the benefits of the HOC to the secondary market, there would be more choices for buyers.”

The government kicked off the HOC in January 2019 to address the overhang situation in the country. The campaign, which was intended for six months, was extended for a year. It generated sales totalling RM23.2bil in 2019, surpassing the government’s initial target of RM17bil.

The government reintroduced the HOC in June last year under the Penjana initiative to boost the property market after it was adversely affected by the Covid-19 pandemic. The campaign ends at the end of this year.

According to Real Estate and Housing Developers’ Association (Rehda) deputy president Datuk N. K. Tong, as of Sept 30, a total of 73,503 residential units valued at RM47.38bil (after discounts) had been sold since the HOC was reintroduced last year. Discounts worth more than RM9bil were given to buyers during the period.

At a briefing last month, Soam urged the government to consider extending the HOC into 2022, as the campaign had been disrupted for over four months this year as a result of the prolonged nationwide lockdown.

According to Rehda statistics, Selangor dominated sales during the HOC with 30,888 units valued at RM21.1bil sold.

This was followed by Kuala Lumpur, which recorded RM11.6bil in sales with 17,468 units sold.

Johor was third highest with 8,723 units valued at RM5.4bil sold, followed by Penang which recorded RM4.5bil in sales with 6,784 units sold.

Meanwhile, Kenanga Research in a recent report says property sales by developers, buoyed by the HOC, have been good.

“Despite the unexpected full movement control order imposed in June, we note that all developers under our coverage are still in line to meet their internal sales target set out at the start of the year, with the exception of Malaysian Resources Corp Bhd.

“EcoWorld Development Group Bhd and Sunway Bhd had already surpassed their initial sales guidance.”

Nevertheless, Kenanga Research says the real test will be when the HOC ends at the end of this year.

“Unless the HOC gets extended again, stamp duties (on memorandum of transfer and loan agreements) which are currently waived will kick in,” it said.

The research house adds that for properties valued at RM300,000 to RM1mil, the duties would add on an additional cost of 2.1% to 2.9% (or RM6,350 to RM28,500) in cash.

“Taking a cue from the car sales trend that came off substantially post the goods and services tax holiday from June 2018 to August 2018, we believe most home buyers would likely seize the opportunity to purchase properties by year-end and property sales would likely come off next year.”

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Home Ownership Campaign , Budget 2022 ,


Next In Business News

CPO futures likely to undergo technical correction next week
Econpile issues termination notice to Gabungan Strategik
Intel's US$20bil Ohio factory could become world's largest chip plant
Shrunken US oil inventories point to chronic under-supply
Royal Dutch no more - Shell officially changes name
Oil price slides, but climbs for 5th week on supply concerns
GLOBAL MARKETS-Bond yields tumble as Netflix fuels stock market sell-off
Rising interest rate fallout unlikely
Policy normalisation can lend support to ringgit
Short Position - Green bond, O&G funding, Going the EV way

Others Also Read