Property agents say oversupply will leave speculators out in the cold

MIEA president Siva Shanker (left) said many Malaysians had previously rushed to buy new properties from developers, thanks to incentives such as interest-free loans during the construction period along with waivers on legal fees and stamp duty.
MIEA president Siva Shanker (left) said many Malaysians had previously rushed to buy new properties from developers, thanks to incentives such as interest-free loans during the construction period along with waivers on legal fees and stamp duty.

KUALA LUMPUR, Feb 24 — Speculators looking to make quick profits by flipping newly built properties are likely to be disappointed this year, the Malaysian Institute of Estate Agents (MIEA) said today.

The ample supply of properties coming into the market this year and next will help temper prices, giving genuine buyers the advantage after years of hefty property price gains.

MIEA president Siva Shanker said many Malaysians had previously rushed to buy new properties from developers, thanks to incentives such as interest-free loans during the construction period along with waivers on legal fees and stamp duty.

“Now we are going to start seeing the effect of this unabated speculation in the past three to four years,” he told reporters here.

With most of these properties scheduled for completion in 2014 and 2015, the primary market will be flooded and depress prices, he said.

The oversupply — especially in hotspots like Kuala Lumpur, Penang and Johor — will be so great that the prices of newly completed properties are unlikely to rise by 20 to 30 per cent as in previous years, he added.

Asking prices will start falling, reaching levels at which developers had sold them off-plan, he said.

Unable to get the desired prices for their brand new houses, the owners will be forced to rent them out, depressing rental rates.

Siva also said property buyers will start looking at houses in the secondary market which would cost 30 per cent to 40 per cent lower than brand new houses, with renewed focus on more established areas such as Bangsar, Cheras and Damansara Heights.

He attributed this partly to the removal of incentives to buy new property, such as the scrapping of the Developers Interest Bearing Scheme (DIBS) in which the developer pays the interest payments for the buyers’ housing loans during the construction period.

MIEA, which represents 20,000 real estate agents nationwide, today also hoped the federal government would consult it before deciding on measures against property investors clubs to curb speculation.

Stopping short of calling for property investors clubs to be declared illegal, Siva suggested that the government step in to regulate such activities.

Genuine house buyers would be impacted by the fluctuating prices and supply of homes compared to such clubs that were able to buy “what they cannot afford” and do not need, he said.

Urban Well-being, Housing and Local Government Minister Datuk Abdul Rahman Dahlan has said his ministry will soon announce a new plan to curb speculation.

Abdul Rahman said property developers who want to sell more than four units to bulk buyers would need to get the Controller of Housing’s nod under the expected new condition, though talks between the government and the Real Estate and Housing Developers’ Association of Malaysia (Rehda) are still ongoing.

Under the Budget 2014 tabled last October, the government announced a hike in the real property gains tax (RPGT) to discourage speculation.

To curb property flipping, the tax was doubled to 30 per cent for properties disposed within three years of acquisition, 20 per cent within the fourth year, and 15 per cent on the fifth year.