PropertyGuru has lauded Putrajaya’s inclusion of measures addressing the property gaps in the recently announced Short-Term Economic Recovery Package (ERP).
The reintroduction of the Home Ownership Campaign (HOC), and revised Real Property Gains Tax (RPGT) and margins of financing for third housing loans onwards serve to shore up sentiment while unlocking pent-up demand, both crucial measures as the nation moves towards a new norm under the Recovery Movement Control Order (RMCO).
“As Malaysia recovers from the COVID-19 crisis, we’re seeing increasingly gloomy macro indicators. Gross Domestic Product (GDP) projections have gone from 4.6% to -4.7% for 2020, with unemployment forecasts rising to 5.5%,” says Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.
“This will naturally impact property, as many Malaysians defer home purchases while focusing on surviving day-to-day. However, the deficit spending approach taken in the ERP is an established strategy in addressing potential recession trends, laying the foundation for a return to pre-Covid-19 levels for the market,” he added.
According to the property marketplace, pre-crisis asking prices were on the uptrend, with the PropertyGuru Malaysia Property Market Index rising by 0.63 percent to 89.46 in Q1 2020, along with strong interest in the central region.
In May, web traffic for properties priced RM501,000 to RM700,000 and RM701,00 to RM1 million saw the highest increase on PropertyGuru.com.my, at 10.4 percent and 12.7 percent respectively.
Similar increases were observed among condominiums (23.5 percent), service residences (19.2 percent), 3.5-storey terraced homes (28.0 percent) and SOHO units (20.0 percent), indicating healthy demand for these property types as property bounces back post-crisis.
However, search patterns moved away from the central region, with Johor (22.5 percent) and Penang (19.3 percent) as prime beneficiaries.
Additionally, the upward revision of 70 percent margin of financing limits for third housing loans onwards for RM600,000 properties and above is particularly timely, given potential interest among investors with financial leverage for strategic high-rise and terrace projects.
In addition, the RPGT exemption for disposal of up to three residential homes per individual till Dec 31 is a boon for sellers and upgraders, as well as those seeking emergency funds.
“Regarding the HOC, its mandate up to 31 May 2021 could help address ongoing residential overhang concerns, having sold 31,415 units worth RM23.2 bil in 2019. The overhang declined to 30,664 units worth RM18.82 bil in the same year, though this downward trend will likely be impacted by the Covid-19 crisis,” said Fernandez.
“However, some clarity is required when executing these provisions. Do stamp duty exemptions apply to new launches as well as overhang units? If so, it may be difficult to reduce the overhang even with HOC 2020.”
Citing a study of HOC 2019’s impact on the segment, property data analytics and solutions provider PropertyAdvisor notes that the extension of the HOC’s stamp duty waiver to the sub-sale market may benefit first-time home buyers.
As for first-time home buyers and the secondary market, CEO of MyProperty Data, operator of the PropertyAdvisor platform, Joe Hock Thor said they have found an increase of about 4 percent in first-time buyer activity within the sub-sale property market as a result of the campaign. This was likely due to increased marketing and media coverage of the property market in 2019 as headlined by HOC 2019.
Furthermore, more than 60 percent of the sub-sale market in 2019 consisted of first-time buyers. Clearly the signs are that we’re in a buyer’s market – but with so much uncertainty, we may not see demand returning to pre-Covid-19 levels among first-time buyers in the sub-sale market until at least Q4 2020. This would be accelerated if stamp duty waivers are extended to the sub-sale market,” said Thor