KUALA LUMPUR, Oct 26 — Efforts announced by Putrajaya to curb spiralling home prices will instead cause buyers to pay more for property, alleged a developers group critical of the measures yesterday.
Conceding that the moves were not surprising, the Real Estate and Housing Developers’ Association Malaysia (REHDA) insisted that the steps revealed in the tabling of Budget 2014 will be detrimental to the property sector.
Taking particular aim at the doubling of Real Property Gains Tax (RPGT) from 15 to 30 per cent for property sold within three years of purchase, REHDA insisted that the number of speculators the move was meant to discourage was “insignificant”.
“Delays of disposal of property by sellers will only further reduce supply into the market causing prices to increase.
“The flat rate of 30 per cent RPGT charged for disposal of properties by foreigners may send the wrong signal to foreign investors with regard to our property investment and promotion policies,” Datuk Seri Michael Yam, the association’s president, said in a statement yesterday.
In yesterday’s Budget announcement, Putrajaya also revised RPGT for property sold four years after purchase to 20 per cent; homes disposed of in the fifth year after purchase will attract a 15 per cent rate of RPGT.
Putrajaya also forbade the Developers Interest Bearing Scheme (DIBS) in which the developer pays the interest payments for the buyers’ loans during the construction of a property, which was seen as an incentive for speculation.
Calling the scheme an “innovative home financing package” made available in high value locations such as Kuala Lumpur, Penang and Johor, REHDA maintained that DIBS was useful in allowing homeowners to finance their purchases.
“Banning DIBS altogether will put pressure of high acquisition cost on genuine buyers including those first time buyers and Bumiputera buyers,” it said.
The association was also critical of the decision to raise the floor price of property available to foreign buyers from RM500,000 to RM1 million, saying this measure may encourage builders to reduce the number of smaller properties such as studio or single-bedroom apartments as they will not be able to price these in the seven-figure range.
Yesterday, MCA Youth chief Datuk Wee Ka Siong expressed similar misgivings over the measures to contain property prices, saying the moves risk “killing” the sector.
“I don’t think we should do it in a very drastic manner because we cannot kill the industry, because the construction industry is something that you have to bear in mind that it will give a chain effect to 150 industries,” Wee told The Malay Mail Online after the tabling of the Budget in Parliament yesterday.
“I think we have to strike a balance because it mostly involves Chinese developers and also suppliers, I’m quite worried for them.”
Although Wee agreed the measures will prove effective in curbing speculation, he said the cumulative effect of increasing RPGT, banning DIBS and raising the floor price for foreign buyers all at once could overwhelm the industry.
“We agree on curbing the speculation but not to the extent of three policies, to kill off the whole thing”.
On the opposite side, however, the National House Buyers Association (HBA) enthused over the measures, expressing confidence that it would go towards preventing a “homeless generation” of Malaysians.
Malaysian property prices have risen by about a third in the past three years, with even bigger rises in hot spots such as Iskandar in Johor.
Putrajaya has been under pressure to address the issue, after an increasing number of Malaysians complained that home prices have soared beyond the affordability of average wage earners.
Yesterday, the government also committed to building more “affordable homes” to cater to low and medium-income households, promising another 223,000 such units throughout the country next year.
