PETALING JAYA (June 9): The extension of the Home Ownership Campaign (HOC) to December 31, 2021 is expected to spur consumer’s sentiments as it could help homebuyers to save up to 4% of the purchase cost, said AmInvestment Bank.

In its property sector report today, the investment bank saw the extension as a positive move to the industry.

“We estimate that the 2021 stamp duty exemption for residential homes priced between RM300,000 and RM2.5 million could save up to 4% of the purchase cost, potentially spurring consumer sentiment”. 

The Ministry of Finance (MoF) has on May 31 agreed to extend the residential home stamp duty exemption scheme under the HOC for six months to Dec 31, 2021.

With this, the stamp duty exemption on Instrument of Transfer is applicable for all residential home purchases from RM300,000 to RM2.5 million, with the first RM1 million to enjoy 100% waiver, while only the balance will be charged 3%.

AmInvestment Bank added that the extension of HOC could lead to developers offering up to 10% discounts, and this can be seen as a positive outlook for developers, especially targeting the affordable segments - as it may help to alleviate a number of overhang properties while the clearing of unsold stocks will generate cash flows despite the lower margins and reduce financing requirements.

However, the report also remained cautious as there are issues such as elevated home prices, recent surge of input costs especially escalating steel bar prices, stricter bank loans for residential property coupled with buyers not qualified for mortgage loan due to their already high debt services ratios.

Additionally, the prolonged pandemic which has affected job security has also led to some consumers holding back from purchasing a house. 

Yet, an optimistic outlook still exists within the affordable segment as there are demands driven by younger demographics, rapid urbanisation with the trend of single-person households and nuclear families. 

Property developer’s performance in first quarter 2021

S P Setia and Sime Darby Property (SD Property) have outperformed during the period as their earnings are supported by higher progress recognition and lower share of losses from the joint ventures and associates’ projects. 

Meanwhile, IOI Properties Group (IOIPG), Lagenda Properties and Mah Sing results performance also came within the investment bank’s expectations.

With IOIPG’s property segment is profiting from its international portfolio with 61% sales from Malaysia, 38% from China and 1% in Singapore; while Mah Sing saw a surge of 30% year-on-year (yoy) in its core net profit with Lagenda achieving a 20% increase compared to previous quarter. 

Meanwhile, Sunway Bhd was dragged down by lower progress billings in its property development and lower rental income from the Covid-19 affected retail and hotel segments, with earnings falling short of our forecasts.

UEM Sunrise was impacted by slower-than-expected construction progress, leading to a loss of RM3 million.

On the market outlook, AmInvestment Bank said the second half of 2021 may look grim due to the prolonged lockdown, which could hamper sales in the second half of this year as sales galleries and showrooms are currently closed while construction activities come to a halt with delivery delays and additional charges for liquidated ascertained damages. 

“The retail and hotel segments will be further hit as shopping malls will only be opened for shops that are deemed as essential services,” it said.

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