Budget 2024: Easing MM2H rules, more infra projects to offset impact of 4% stamp duty on MOT to foreign property buyers, says MIDF Research

• The research house kept its positive stance on the sector and said property demand will keep recovering as the benchmark overnight policy rate rate is likely to stay the same for this year.  

KUALA LUMPUR (Oct 16): The relaxation of Malaysia My Second Home (MM2H) rules, more infrastructure projects and expansion of the Skim Jaminan Kredit Perumahan (SJKP) will offset the impact of a flat 4% stamp duty on memorandum of transfer (MOT) by non-citizens and foreign-owned companies in property transactions on the real estate sector, said MIDF Research.

The research house kept its positive stance on the sector and said property demand will keep recovering as the benchmark overnight policy rate rate is likely to stay the same for this year.  

In addition, the property overhang situation in Malaysia is improving, which is good for the sector’s near-term prospects, it said in a note on Monday.

“Our top picks for the sector are Mah Sing Group [Bhd] (Buy, [target price (TP)]: RM1.01) and Matrix Concepts [Holdings Bhd] (Buy, TP: RM1.86) as we remain sanguine on property developers that focus on mid-market and affordable segment amid resilient demand for affordable homes,” it said.

Commenting on the Madani Budget 2024 that was tabled on Oct 13, the research house said the property sector may benefit marginally from the loosening of requirements for the application of MM2H that may attract more foreign buyers.

It added that the RM10 billion allocation to extend the SJKP — which is aimed at helping those without regular income to purchase homes — as well as the revival of five Light Rail Transit Line 3 (LRT3) stations and the development of the RM10 billion Penang LRT that links the island to the mainland will further boost demand for real estate in Klang Valley and Penang.

However, MIDF research expects the 4% flat rate stamp duty on MOT for non-citizens and foreign-owned firms may discourage some foreign buyers. 

“Overall, we think that the property sector will have a net positive outcome from Budget 2024 as the advantages of MM2H easing and new infrastructure projects will outweigh the minor drawback of [the] stamp duty on memorandum of transfer (MOT) for foreigners,” the research house said.

Earlier, Bank Negara Malaysia released data showing the demand for property loans grew in August 2023 to RM54.4 billion — a 4.9% month-on-month (m-o-m) increase — following a 2.7% m-o-m increase in July 2023. 

Compared to the same month last year, loan applications also increased by 2% year-on-year (y-o-y), after a 1.5% y-o-y growth in July 2023. 

“The total loan application in 8M2023 (cumulative eight months of 2023) was slightly higher at RM403 billion (up 1% y-o-y), indicating a modest improvement in property buying interest,” the report said. 

On the other hand, the approval rate for property loans also saw an improvement in August 2023 as the amount increased to RM24.8 billion (up by 7% m-o-m), after a drop of 3.7% m-o-m in July 2023. 

The higher approval rate matched the higher loan application and was also boosted by the higher ratio of approved loan to applied loan of 45.7% in August 2023, compared to 44.8% in July 2023.

Year-on-year, the approved loan amount rose for four months in a row since May 2023, reaching a cumulative total of RM178.7 billion (an increase of 7.8% y-o-y) in 8M2023.

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