KUALA LUMPUR: The reintroduction of the stamp duty exemption for first-time homeowners is expected to have a minimal impact on the overall property market but it should help to spur transactions within the primary residential market.
PPC International managing director Datuk Siders Sittampalam said the incentive is timely, given the rising borrowing cost due to higher interest rates.
“The exemption will have a positive impact on the market, given the higher overnight policy rate (OPR), which has been raised by 50 basis points so far this year.
“There is talk it could be raised further. So, the stamp duty waiver will augur well for the primary market and help to unload new supply,” he told StarBiz.
Earlier this month, Bank Negara raised the OPR to 2.25% with the aim of cooling the inflation and normalising the policy rate.
Siders added that the property market is currently subdued, in light of factors such as rising inflation and the weaker ringgit.
“Consumer sentiment is not at its best right now. Furthermore, this incentive does not apply to the secondary market. So it will still continue to be a challenging period for that segment.”
Mah Sing Group Bhd
founder and group managing director Tan Sri Leong Hoy Kum said the stamp duty exemption will encourage more home buyers to purchase their first home.
“For many Malaysians, owning a home is an ultimate aspiration. Unfortunately, due to financial constraints and the rising cost of living, obtaining appropriate financing has been a major hurdle for first-time buyers as well as young home buyers, which has been heightened especially during the current challenging period following the pandemic.
“However, with the government taking the important steps in steering the direction, we believe that all industry players and stakeholders will work together to ensure that the incentives will ultimately benefit the home buyers and propel the Malaysia property market,” he said in a statement.
PPC International managing director Datuk Siders Sittampalam said the incentive is timely, given the rising borrowing cost due to higher interest rates.
RHB Investment Bank said the stamp duty waiver is expected to boost demand slightly, especially for properties priced below RM500,000.
However, it said the waiver is anticipated to have a minimal impact on the overall property market, in light of the current economic headwinds.
RHB noted that issues such as rising inflationary pressure and softer ringgit will deter demand for property over the next six months.
“Coupled with the expectation of higher interest rates ahead, many potential property buyers will likely hold back their purchases over the near term.
“We also note that some of the developers are still offering stamp duty waivers for certain products in order to stimulate demand,” it said in a report yesterday.
Prime Minister Datuk Seri Ismail Sabri Yaakob announced last week that a stamp duty exemption will be offered to first-time home buyers for properties priced up to RM500,000.
There will also be a 50% discount on stamp duty for those buying properties priced from RM500,000 to RM1mil.
The exemption is for sales and purchase agreements that are signed between June 1, 2022 and December 2023.
RHB said the exemption is similar to one of the features under the Home Ownership Campaign that ended in December 2021, whereby stamp duty waiver was offered for properties priced up to RM1mil.
“We think Mah Sing, LBS Bina Group Bhd, Matrix Concepts Holdings Bhd and Tambun Indah Land Bhd will benefit from the incentive as these developers have relatively high exposure (more than 60%) to property products priced below RM500,000.
“Potential benefits to the bigger players may not be that significant, as mid-range products make up a smaller percentage of their overall portfolio.”
Maybank Investment Bank also expects a muted impact from the stamp duty waiver, especially in light of the higher interest rates at present which could affect house buyers’ affordability.
Mah Sing Group Bhd founder and group managing director Tan Sri Leong Hoy Kum said the stamp duty exemption will encourage more home buyers to purchase their first home.
“The political uncertainties ahead of the 15th general election could also affect the buying sentiment of big-ticket items.
“At this juncture, we are unsure if the latest incentives will override what had been announced in the Penjana stimulus package in June 2020,” the bank said.
The government had extended the stamp duty exemption on instruments of transfer and loan agreement for first-time home buyers for residential properties up to RM500,000 per unit until Dec 31, 2025, it added.
CGS-CIMB Research also believes the stamp duty waiver will not have a significant impact on the property market.
The research house has a “neutral” outlook for the sector, given the potential interest rate hikes, higher property overhang and escalating construction costs arising from building material and labour shortages.
“We like S P Setia Bhd and Sime Darby Property Bhd, given their experience within the green building space and massive landbank to cater to changes in consumer preferences.
“Sector upside risks include stronger-than-expected new sales, while downside risks involve a weaker macro outlook.”
Hong Leong Investment Bank, meanwhile, said it is positive on the news of the reintroduction of the stamp duty waiver.
“Under a bruised property market, this development should provide a shot in the arm to help lift the sector sentiment.”
The research house is maintaining its “neutral” rating for the property sector.
It said the current sector dynamics is “a tug-of-war between the positives and negatives.”
“On the negative end, there is a lack of visibility on when the challenges faced by the developers (elevated building material costs, labour shortage and property market overhang) will start to ease, while demand outlook has also weakened in recent months following the interest rate upcycle and inflationary pressure.
“On the positive end, the sector recovery is supported by the healthy economic recovery, better job security for buyers, normalisation of construction activities and pick-up in property sales activities through the resumption of sales galleries.”
