Friday, October 25, 2013

Budget 2014

There is some focus on cooling property prices in Malaysia in this new Budget announced today. If anyone who has bought properties and are looking at flipping upon completion (as many do...) - they're fucked!  

The new tax scheme is now a whopping 30% if sold within the 1st 3 years:

1st to 3rd year : 30%
4th year : 20%
5th year : 15%
Beyond 5th year : no tax

Those above are for Malaysians only. Non-citizens pay 30% for selling their properties within the 1st 5 years and 5% beyond that. Expect the higher end properties to suffer in sales because of this as foreigners start to find other markets more attractive to invest in - for example Thailand where there is no RPGT. Also, the minimum price that can be purchased by foreigners now is RM1million (up from RM500k). Those studio units, SOHO, SOFO, SOVO usually priced between RM600k to RM1million are expected to suffer. Developers should build less of these in the 1st place as they are not sustainable although they are popular due to the pricing.

Perhaps what will hit developers most is the abolishment of DIBS (Developer Interests Bearing Scheme). While the original intention of DIBS is to promote home ownership by making homes easier to own, the reality is, DIBS has become a haven for speculators to the extent every developer and his dog has been offering DIBS.

But it will be interesting to see how this will really affect property prices as all previous efforts such as reintroduction of RPGT and the 70% capping on 3rd property loan seems to be not as effective. Instead, I think the property prices are already cooling anyway due to over-building especially those priced over RM500k. We rarely or never see any HOMES in decent locations that are priced below the affordable threshold of RM350k for most wage earning Malaysians these days.


Patch said...

I think service apartments in KL City and Mount Kiara in the range of RM500K to RM1 million to particularly suffer. Hit by low occupancy rates and now foreigners unable to buy them.
Service apartments in PJ may be less hit especially for those in good locations (except for the new incoming supply)....

sinleong said...

but i see serviced apartments in PJ have even lower occupancy than KLCC