KUCHING: Property developers have expressed mixed reaction to Budget 2014, with particular concern on the impact of the Real Property Gains Tax (RGPT) hike.
The tax, which is aimed at curbing speculation, could do more harm than good in a state like Sarawak, where house prices and purchasing trends are vastly different from those in Peninsular Malaysia.
According to the Sarawak Housing and Real Estate Developers Association (Sheda), its members are already bracing for lower growth next year.
“In the first place, one should remember that house prices in Sarawak are not as high as in Peninsular Malaysia. Big cities over there might need these measures, but here, in smaller cities and towns, it’s not so good to implement such one-size-fits-all solutions,” Sheda secretary-general Sim Kian Chiok told The Star yesterday.
In Budget 2014 unveiled by Prime Minister Datuk Seri Najib Tun Razak on Friday, under the increased RGPT, the rate would be 30% for properties disposed within the first three years.
It is a doubling of the preview rate. For disposals within four and five years, the rates have been increased to 20% and 15% respectively.
For disposals made in the sixth and subsequent years, no RPGT is imposed, whereas companies are taxed at 5%.
Sim said drawbacks in Sarawak were not limited to developers. Citing higher rural-urban migration rates in the state that is still less urbanised, Sim said potential buyers would have to think “very carefully” before committing to a purchase.
“Once they have purchased, they have to hold it for five years if they don’t want to pay any RGPT. For a lot of workers who require job mobility, they might not want to buy anymore. They’ll just rent. As a result, the Government will actually have less stamp duties to collect due to reduced transactions.”
Sheda, Sim said, was also less than enthusiastic on the doubling of minimum price for foreign property buyers, from RM500,000 to RM1mil.
“Sarawak does not have many foreign (house) owners. This will not help out Sarawak, My Second Home programme.”
On the much talked about GST, which will be implemented in April 2015, Sim said there would be some impact.
“Although there are exemptions, there are other services needed to build a house that might not be exempted. So, yes, house buyers will be affected by GST.”
The private sector in Sarawak builds about 10,000 units of new houses every year. Primary markets are Kuching, Bintulu, Miri and Sibu. In the state capital, around 4,000 new units are built annually.
Recently, Sheda president Zaidi Ahmad said the average house price in Sarawak was RM316,000.
Depending on locality, that price can either fetch a double-storey terraced unit or a double-storey semi-detached.
Among the low end, the average price of a single-storey terraced unit is now RM222,000 while a double-storey semi-detached house is priced at around RM423,000.
Zaidi said 22,000 housing units were either being built presently or had been approved in Sarawak.
Of the total, 4,500 units are starting to be built this year. Terraced houses made up the majority at 14,200 units.
Speaking at the launch of a property expo then, Zaidi said the private sector could not build more houses because of the lack of roads and bridges opening up new areas for development.
He also called on the Government to build more affordable housing, rather than ask the private sector to subsidise low-cost and low-cost plus houses in large residential developments.