Demand for houses may slow down due to govt measures to curb escalating prices

Published: Friday January 17, 2014 MYT 12:00:00 AM 

Updated: Friday January 17, 2014 MYT 12:01:58 PM

BY JACK WONG

KUCHING: Many developers are adopting a wait-and-see attitude on new property launches as demand may slow down due to government measures to curb escalating prices.

Sarawak Housing and Real Estate Developers Association secretary-general Sim Kiang Cheok said as developers were gauging the impact of the tightening measures, new property launches would, therefore, have to be based on effective demand.

“They (developers) are worried about banks’ tightening (in giving out property loans). Banks are not lending for developer interest bearing scheme (DIBS) while Bank Negara has required banks to lend based on nett income (of house buyers).

“These measures will dampen demand and prices of houses,” he told The Staryesterday.

Sim said the higher real property gain tax (RGPT), which took effect this year, would deter speculators from driving up house prices too fast.

Property owners have to pay RPGT rate of 30% on properties disposed within a three-year holding period while the tax are 20% and 15% respectively for properties sold within the fourth and fifth year.

Sim said construction cost for houses would continue to go up as most building materials would be more costly after the Government reduced fuel subsidies, and higher electricity tariffs in Peninsular Malaysia from this year.

Developers would have to pay more for building materials as a result of increasing manufacturing and transportation costs.

“With goods & services tax (GST) to be introduced in April-2015 (at rate of 6%), prices of some building materials will rise.

“The increase in construction cost will be translated into (higher) house prices,” he added.

Sim said the price hike in residential properties would not only be subjected to higher construction cost but also other factors, such as demand, design and types of houses and amenities, location as well as facilities in surrounding areas.

He said in areas where demand was low, there might not be any increase in home prices.

Anticipating current house prices in Sarawak to remain generally stable on sustained demand because of rural-urban migration and development of Sarawak Corridor of Renewable Energy (SCORE), Sim said from now to April-2015 before the implementation of the GST, “this period represents a good window to buy houses”.

“Those who could afford it and with good credit rating will benefit from investing in properties in good locations. They will enjoy good returns,” predicted Sim.

He said for citizens who had yet to own any houses, it was now a good time to invest as the Government was helping first-time house buyers by giving 110% loans to those who qualified under “Malaysia’s My First Home” Scheme.

“PRIMA housing (1 Malaysia housing programme) is being undertaken throughout the country, with the building of affordable houses in cities and urban centres,” he added.

(PRIMA housing is specifically for Malaysians earning not more than RM6,000 per month. The three-room homes under the programme cost between RM150,000 and RM300,000, depending on size and location.)

Sim suggested potential buyers to scout for affordable houses in areas such as after the Batu Kawa bridge, Matang (beyond 9.6km), Kuching-Serian road (beyond 17km) and Samarahan.