‘Increase stamp duty to further reduce speculation’

PETALING JAYA: Speculation in the property market can be further reduced by increasing stamp duty, said Rahim & Co Chartered Surveyors Sdn Bhd founder and executive chairman Datuk Abdul Rahim Abdul Rahman.

“We think that the overall intention [to curb speculation] will be better achieved with an additional measure such as imposing an additional stamp duty for purchases of a third property and above,” he told a press conference yesterday.

Rahim said this measure has been successfully implemented in countries such as Singapore and Hong Kong.

He proposed that the stamp rate for the purchase of a third property and above be applied based on the following percentages:1% for properties below RM100,000, 3% for properties priced between RM100,001 and RM500,000 and 5% for above RM500,000.

Commenting on the hike in the real property gains tax (RPGT), Rahim said the main impact will be felt in the residential sector in Kuala Lumpur, Iskandar Malaysia and Penang, followed by shops and commercial sectors, such as small offices/home offices (SoHo).  

The office and industrial markets will see minimal impact. The office market is already adjusting in view of the impending influx of supply in the market. The industrial market is a very small sector with about 2% market share.

Abdul Rahim: Expect some slowdown but the effects may plateau.
Rahim commended the government’s move to increase the minimum price of houses purchased by foreigners to RM1 million. “However, Iskandar Malaysia will be most affected by this move.”

He also praised the government’s announcement on the establishment of a National Housing Council and the provision of RM1 billion in public-private partnerships to provide more affordable housing.

Rahim & Co Research director Sulaiman Saheh said there is no directive at the moment whether the same rates will apply to Malaysia My Second Home (MM2H) applicants.

“Perhaps the latest measures would encourage more genuine foreign investors to invest in Malaysia in the long term,” he said, adding that while the impact of the house price hike on foreign buyers is not big, any measures to curb excessive speculation by local and foreign interests are good for the market.

It is believed that the implementation of the goods and services tax (GST) of 6% will not have a big impact on property prices.

“The developers have to take lower profits themselves. They can’t use it [GST] as an excuse to significantly hike prices,” said Rahim.

This year, there has been a significant decline in transactions in the property market. In the first half,  total volume of transactions fell 14.4% to 185,709, compared to 217,067 the same period last year.

Last year, the overall property market continued its growing trend albeit with a small drop in total volume of transactions in the country. The total value of transactions, however, grew 3.6%. Johor was the best performer in terms of market growth.

Looking ahead, Rahim & Co expects some slowdown but the effects may plateau. For the residential sector, landed freehold properties will continue to be the preferred choice. The primary market will face more challenges while the secondary market is expected to be more active.

The office market is expected to remain challenging amid the incoming supply, which will put downward pressure on rental rates for older buildings. A steady growth for the retail sector is forecast, driven by strong domestic spending.

The lag in supply growth over the years and the limited supply in the industrial sector underline a potential price appreciation in this market segment. Rahim & Co expects development land transactions for the next two years to be mainly along the mass rapid transit and light rail transit lines.

This article first appeared in The Edge Financial Daily, on November 8, 2013.

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