Henry Butcher Penang: Nothing much to cheer about for non-PR1MA homebuyers

KUALA LUMPUR (Oct 21): “Disappointing.” That was the response from a property consultant towards the Budget 2017 that was tabled by the Prime Minister Datuk Seri Najib Razak in Parliament today.

“Nothing much to cheer about based on what’s announced and I don’t think it will help to uplift consumer sentiments,” said the senior vice-president for asset valuations at Henry Butcher (Malaysia) Penang Sdn Bhd Shawn Ong.

Ong said he doesn’t see how Penang homeowners will benefit from Budget 2017, seeing that the state government has already introduced affordable home programmes a few years ago.

“In addition, the affordable homes are only available for homebuyers under the 1Malaysia People’s Housing Programme (PR1MA), what about first-time homebuyers who are not under PR1MA?” he asked.

Earlier, Najib has announced that through the National Blue Ocean Strategy initiative, the government will provide vacant lands at strategic locations to government-linked companies and PR1MA to build more than 30,000 houses with selling prices of between RM150,000 and RM300,000 which is “much lower than the market price from RM250,000 to RM400,000”.

Najib also announced a “step-up” end-financing scheme for homebuyers under PR1MA programmes, enabling homebuyers to access loans of up to between 90% and 100%, supposedly to result in lower loan rejection rates.

Meanwhile, as for the stamp duty increment to 4% from 3% starting on Jan 1, 2018 for properties worth RM1 million and above, Ong said this will essentially increase the burden of purchasers.

“Buyers will be affected in terms of acquisition cost, meaning the cost to pay for the Sales and Purchase Agreement, stamp duty for housing loan, among others.

“This will also burden developers because they have to pay stamp duty when they purchase a piece of land.

“Average land cost nowadays in Penang island is at about RM300 to RM400 psf and even if you’re talking about the southern part of Penang island like Batu Maung, the land is between RM160 and RM200 psf.

“Say, if you build a condo project on a 1.4 acre land, it can easily cost you [developer] RM13 million. For the land cost of RM200 psf and above, the selling prices of these condos have to be priced at least RM500 psf in order for developers to cover the land cost as well as the construction cost,” he explained.

According to Ong, the government should increase the Loan-To-Value (LTV) ratio as Bank Negara Malaysia has capped the maximum LTV ratio is capped at 70% for borrowers purchasing their third home. The rule does not apply to financing facilities for first and second homes.

“The LTV plays a major role in the property industry because a homebuyer who’s buying a RM1 million home will have to fork out RM300,000 upfront for deposit.

“If you lower the payable deposit payable, that will help to stir up the property market. Indirectly it’s also beneficial for developers who are looking to launch new housing projects. But this is not being addressed in the Budget 2017,” he said.

budget2017