Budget 2016 For Property Market

Budget Joy or Budget Killjoy?

We are once again at the countdown stage for the annual Budget. Being the first Budget to be tabled after the announcement of the 11th Malaysian Plan, analysts are expecting Budget 2016 to see an increased focus on project developments. This is also the first Budget after the GST was implemented and many are waiting to see how the revenue collected from the GST will be used to promote economic growth and people’s welfare.

Making this Budget all the more critical is the fact that it comes at a time where Malaysia is facing internal and external problems in the political and economic realm. The stakes are high and everyone is waiting to see what is contained within that briefcase of our Minister of Finance.

You, our readers, are no doubt concerned about what the Budget has to say about the real estate market. Affordable housing has long been one of the items that topped the list of concerns over the past years, and this issue we listen to some of the wishes of our industry insiders.

Cool Enough Already?

Market cooling measures has pretty much been the order of the day for the past few years as the government tries to put the brakes on the real estate market.

The series of cooling measures were first tabled during a time of economic buoyancy and perhaps it is time for the government to dial back a little to stimulate the housing market in this lacklustre economy.

After all, the housing market is one of the Malaysia’s economic pillars and renewing its vigour might just take some heat off our economy. It will also be a huge boost to see the government relax restrictions on the sub-sale market, including lowering of the RPGT so as to return life to the market.

Budget Recap

A quick look at the past Budget reveals how the real estate market was being squeezed over the past five years. In 2010, the government reinstated the RPGT and all properties sold within five years were subjected to 5% tax. The following year, the stamp duties was cut by 50% for first time buyers of properties no more than RM 350,000 and the My First Home initiative was introduced.

In 2012, the price ccp for My First Home was raised to RM 400,000 while the RPGT was adjusted upwards to 10%. 2013 saw the RPGT adjusted upwards yet again and refinements were made to the My First Home programs to up the salary eligibility ceiling to RM 5000.

2014 saw the taxation moved into high gear as the RPGT was adjusted higher once again and taxation targeted at foreign investors was introduced. The government also announced plans to build some 223,000 affordable housing under various schemes.

Budget 2015 did not include many changes on the property market and most of the cooling measures remained in place despite the fact that the market has already cooled down significantly.

Affordable Housing Remains Hot Topic

Many developers expect the government to continue to focus on promoting affordable housing, but hope that the government can follow up with supplementary strategies such as reducing land cost, improving infrastructure, providing incentives and lower borrowing barriers.

The government should also consider providing concessions to buy sub-sale properties as there are bargains out there but young people are often hampered by their ability to secure a mortgage.

Many developers also hope that the government can relax the restrictions on foreign buyers to recover some of the capital outflow happening in the past year so as to revitalise the housing market.

Tax Reduction the Key

There are fewer things more certain in life than death and tax, and Malaysian have had to deal with increase in taxation for the past couple of budgets. The property market in particular is full of taxes such as RPGT, stamp duty, quit rent, land tax and more.

While the government had justified the increase in taxation in the previous budgets as a means to rein in the heated market, many financial and legal experts believe that it is perhaps time for the government to scale back on the tax during this turbulent time to rebuild market confidence. Or perhaps explore the introduction of incentives to focus on the relevant markets as a starting point to boost the economy at large.

Beyond merely making it easier for people to buy their own homes, many experts are also calling for greater protection to be put in place to protect the interests of homebuyers. Amongst those include the fine-tuning of the built and sale model and introducing more transparent housing policies and pricing strategies.

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