Reduce Stamp Duty For First-time Homebuyers, says Expert

Premendran Pathmanathan, General Manager and Data Analyst at iProperty, says the government could consider reducing the stamp duty tax for first-time homebuyers to further encourage home ownership.

He says this is part of the necessary incentives that can be taken by the new government in the forthcoming national budget to be unveiled by the Minister of Finance in October for property players and property buyers.

He urges the government to consider several policies relating to stamp duty tax, the Home Ownership Campaign (HOC) and foreign buyer market.

 “We hope the government could consider reducing the stamp duty tax for first-time homebuyers after the current HOC ends 31 December 2021.”

“A stamp duty reduction is essential to help young Malaysians get on the property ladder. On the same note, we hope the government will review policies and introduce supplementary measures to encourage homeownership among young people.

“For instance, first-time home buyers’ tax relief for home loan interest should be reintroduced to further encourage homeownership among young people. This is because the earlier a homebuyer gets onto the property ladder, the more time they have to benefit from capital appreciation of their properties,” he says in an interview with Business Today.

He also calls for the extension of the Home Ownership Campaign (HOC) until December 2021

“The various financial aid packages by the government have helped to provide short-term relief to many Malaysian property consumers and the property sector as a whole. The extension of the Home Ownership Campaign (HOC) until December 2021 continues to encourage homeownership among Malaysians, especially young people,” he says.

He adds that the extension of the HOC could provide incentives and bring an increase in property transactions this year as property seekers would take advantage of the current low-interest rate.

Alternatively, he says the government could extend the duration of the HOC. According to the H1 2021 Portal Demand Analytics (Subsale Residential Market), in addition to providing attractive deals for homes in the primary market, the campaign have motivated aspiring homebuyers to spend more time online and browse subsale property in the same areas to obtain a benchmark for prices. This could be another main reason which contributed to the high subsale property demand growth in H1 2021.

The various financial aid packages by the government have helped to provide short-term relief to property consumers and the property sector as a whole, he says, based on his findings about the Malaysian property sector affected by previous restrictions during Covid 19.

Premendran and his team produced Malaysia’s very first demand-supply property report, the iProperty Portal Demand Analytics.

The analytics provides an overview of sub sale residential property demand using iProperty.com.my’s user visits and property listings data for residential sub sale properties in Malaysia.

Referring to the portal analytics, he observes that there was an increase in home loan applications in the first half of 2021 as many homebuyers took follow-through actions by applying for home loans, indicating genuine purchasing interest.

The subsale property market is also showing encouraging signs of recovery for the first half (H1) of  2021, as Portal Demand Analytics (Subsale Residential Market) shows that demand has increased to +19.2% in H1 2021 from -2.5% in H1 2020.

One of the critical factors which supported the demand recovery is that property seekers have warmed up to the idea of conducting their property search journey online, such as at iProperty.com.my.

Besides online property browsing, following up with property agents virtually is being accepted as the new normal. As the country is ramping up its vaccination program and moving towards a loosening of restrictions and movement controls, the industry is optimistic that the property market will continue to recover in the second half of the year.

Based on Bank Negara Malaysia’s monthly loan application data, the value of home loan applications grew +86% year-on-year (YoY) from RM96.4 billion in H1 2020 to RM179.4 billion in H1 2021. In addition, the value of loans approved has increased by +92.6% YoY. With the Overnight Policy Rate (OPR) at a record low of 1.75%, many consumers are searching for property bargains in a low interest rate environment.

He stresses that another factor that could stimulate the local property market is investments from foreign buyers. Therefore, the government would do well to re-examine the recently announced Malaysia My Second Home (MM2H) policies to be more investor-friendly and less restrictive to foreign homebuyers.

“Even though the MM2H programme only encompasses a relatively small number out of the total homebuyers in Malaysia, it is an essential driver of foreign buyer demand. Furthermore, the MM2H programme could help reduce the property overhang and the supply of unsold units which are in the higher price range,” he says.

LEAVE A REPLY

Please enter your comment!
Please enter your name here