Budget 2012 to cool the property bubble

Article by Michael Tan

After listening to the Budget 2012 and reading about it in the papers, I am of the opinion that the Budget 2012 offers a neutral position in the current economic situation. I think there are 2 areas the Government wants to address; one is the dissatisfied first time home owners, who are unable to buy their first property at the moment due to the ever escalating prices of properties and two the Developers, who are big time player that also contributes substantially to the Malaysian economy.

To know how to capitalize on the Budget 2012, please register your seats here http://www.nmd.aboutpropertyinvestment.com

Majority of first time home owners as well as home owners buy from Developer; because of the fancy advertising by the Developer as well as the lack of research on the buyer’s side. The Developer will put out attractive advertising and pretty concept that gives the perception the marketed project is a good one. The other reason is, by buying from developer, the buyer is buying a new property, hence, there is little to no maintenance and repair. The buyer also has the flexibility to design and renovate their property to their preference. So majority of home buyers actually buy from developer. Looking from that perspective, pricing from developers has increased substantially over the past 2 years with a price hike of at least 30 – 50% within 3 main markets being affected - Penang, Kuala Lumpur and Kota Kinabalu.

In the 3 main areas listed, Penang experienced the highest growth in the past 2 years itself; with average price move of about 30%. Buyers are displeased with the increase. However, not so with the Developers.

How then, does the Government address these 2 areas. With the RPGT increased to 10%, the Government aims to soothe first time home buyers with the intention of saying “we have done something to try to cool the property price increase”. On the other hand, with an increase of 10%, it will only make it slightly harder (but not that hard) for an investor to sell his/her property – which aims to take care of the Developer’s interest.

Therefore, the main result will be a neutral one, meaning there will not be any significant changes on the property outlook.

What about us Property Investors? Well, we must remember that RPGT is an end game. It only comes into effect when an investor wants sells his property. Therefore there is not very much influence on the buying situation. Nothing has been done on Developers who goes out offering extremely good pricing, low entry deal such as discounts upfront, which is as good as 0% down payment. Developers are also giving Developer’s bond scheme, which aims to challenge the current LTV restrictions of 70%. So, interest free scheme is given out, where buyer only pays down payment (in this case 0% or low) and the rest of the money is financed by the Developer. Essentially, the Developer just mark-up the property price, which brings the property price to the next level. All things being said and done the recent increase in RPGT has little effect on property price, because the Developers’ offer makes the buying process for the home buyer very easy. Therefore Developers are still able to sell more of their overpriced property.

I will be speaking more and giving you in-depth and detailed analysis of the Budget 2012 in Penang this coming Saturday, 22 Oct, 2012 at 1pm in Vistana Hotel, Penang.

For further information and to secure your seat, please register here http://www.nmd.aboutpropertyinvestment.com as seats are limited.

If you want to know how to capitalize on the Budget 2012, please make the effort to come.

Looking forward to seeing you there.

Till then, happy investing.


Freemen is an organization which has been training investors since 2008 to benefit from any market. We’ve made 200 individuals more than RM3Million in profit, investing in over RM30Million worth of properties, ALL with no money down! Property coach, Michael Tan, a.k.a the Millionaire Maker will be giving a talk this coming Saturday, 22th of Oct in Vistana Hotel, Penang entitled “Will the Budget 2012 cool the property bubble” from 12:30pm till 5pm. Book early as we will be expecting a full house.

*SPECIAL OFFER: 1st 17 people to register in for this event will get a Ho Chin Soon Book. Early bird price at RM 47/pax only

So hurry, take action now and register here http://www.nmd.aboutpropertyinvestment.com as seats are limited