Cooling measures introduced by the government in the 2014 Budget has impacted the property sector, with some developers saying they have seen dampening interest from buyers.
The lower-than-expected turnout at a major property fair here over the weekend is an indication of cooling appetite in the primary market.
“Property developers and buyers are uncertain over where the market is heading. They are not sure how the real property gains tax (RPGT) and the Developer Interest Bearing Scheme (DIBS) work,” said industry players.
Given the effects of the cooling measures tabled in the national budget, Hong Leong Bank Research (HLB Research) reiterates its “neutral” stance on the sector.
HLB Research said in its latest research note that there may be an increase in non-performing loan ratios and loss of holding power.
It expects margin erosion due to raw material price spikes and/or lower selling prices, a slowdown in sales and fewer launches.
HLB Research also anticipates a slowdown in demand for the medium to high-end segment and in economic growth, as well as tighter lending policies by banks.
A survey by the research house shows that developers are avoiding offering DIBS for new projects, with some offering interest rebate schemes similar to DIBS for high-rise projects.
“Developers acknowledged that they expect the cooling measures to adversely impact their sales,” it said.
It was reported that UEM Sunrise Bhd is offering cash rewards of RM4,000 a month for two years for its Arcoris project in Mont Kiara here.
The Real Estate and Housing Developers’ Association Malaysia is also seeking further clarification from the government on the RPGT and DIBS, says its president Datuk Seri Michael Yam.
“The new RPGT rate is supposed to be effective from January 1 next year, but no one is sure whether it applies only to new properties purchased then or also to those acquired in the last two or three years,” he told Business Times.
Yam expects the market to be soft for the next six months, with some developers delaying their launches.
“The government should monitor the situation and make adjustments if necessary,” he said. - By Sharen Kaur (Business Times)