Thursday, November 14, 2013

Home prices to climb at slower pace


Posted on 8 November 2013 - 05:38am
Eva Yeong

KUALA LUMPUR (Nov 8, 2013): Prices of residential properties, especially in urban areas like Kuala Lumpur, Iskandar Malaysia and Penang, will continue to escalate but at a slower pace this year, said Rahim & Co Chartered Surveyors Sdn Bhd, estimating that house prices in Kuala Lumpur will go up by 10% due to demand from the growing population.

Average price growth rate in Kuala Lumpur was 10% to 15% for the past five years.

Rahim & Co executive chairman Datuk Abdul Rahim Rahman noted that the property market in the first half of this year was on a downward trend, with prices brought down by many vacant units in the Kuala Lumpur City Centre area.

"A lot of foreigners paid 10% deposit, but did not go through with the sale due to the economic downturn," he said, adding that these foreigners pulled back as problems arose in their home countries.

For 2014, Abdul Rahim said the residential sector is expected to see more interest and activity in the secondary market.

"New property launches will face more challenges, but developers will respond in more creative ways to manage the expected slower take-up rates," he told a media briefing on the impact of Budget 2014 on the property market yesterday.

"For office space, prices may drop next year amid incoming supply size and external factors while rentals may face downward pressure, especially for older buildings," he added.

Abdul Rahim sees measures announced in Budget 2014 having a knee-jerk effect on property activity in the country, but this is unlikely to last.

"Though the increase in real property gains tax (RPGT) rates is a key measure to curb speculation, we think that the overall intention would be better achieved with an additional measure that is imposing additional stamp duty for purchases of third property and above," he said.

In the recent budget, there were no proposals tabled regarding stamp duty.

"We propose additional stamp duty to be applied for third property and above, consistent with Bank Negara Malaysia's loan-to-value (LTV) limit of 70% for third property and above. The first two properties would have the same stamp duty calculation as per the existing regime," said Abdul Rahim.

The property consulting company is proposing a 3% stamp duty for properties priced between RM100,001 and RM500,000 and 5% stamp duty for properties priced above RM500,000.

The existing regime is currently 1% stamp duty for properties priced up to RM100,000, 2% for properties priced between RM100,001 and RM500,000, and 3% for properties priced above RM500,000. This regime applies to the purchase of the third property and above.

Meanwhile, Abdul Rahim described the 30% RPGT imposed on properties sold within the first three years as "fair", saying it will likely reduce speculative activities without dampening the property market.

"What we're trying to stop are the 'flippers' who pay 10% deposit and buy five units. These are the speculators, hoping that when the roof of the building is up, it (the property value) would have increased by 20% or 30%.

"They only pay 10% and can make a gain. This is what the government is trying to stop. These are the flippers, the speculators who buy not for investment but to make quick money. This is the problem," he said.

On the impact of the goods and services tax (GST) which will be introduced at 6%, Abdul Rahim said it may lead to an increase in cost of building material and that developers would have to take this into consideration and take lesser profits.

Rahim & Co Research Sdn Bhd director Sulaiman Akhmady Mohd Saheh said although the GST will be applied across the board, this will be balanced out with the subsidies announced by the government for developers who build low- and medium-cost homes.

No comments:

Post a Comment