Mixed views on Budget 2016 revisions

KUALA LUMPUR (Jan 28): The revisions to Budget 2016 pertaining to the property market have drawn mixed responses from the industry. The move to immediately limit sales of new homes priced up to RM300,000 to first-time homebuyers has drawn especially strong reactions.

Real Estate and Housing Developers Association (Rehda) deputy president Datuk Soam Heng Choon said this move has varied implications for the market, depending on locality.

“Maybe in Kuala Lumpur this is okay, especially for lower-income earners, but not for other states. For example, in smaller towns or rural areas, houses may be priced below RM300,000. It will not be possible for a person to upgrade [to a new home] if they have already bought a home,” he said.

Rehda is in the midst of collating more information from its state branches before it issues a statement, said Soam.

However, MKH Bhd group deputy property director Datuk Kenneth Chen said the restriction will not have a significant impact on the market, as current house prices in many places have exceeded RM300,000.

“The impact to developers is minimal as in most places, homebuyers can hardly find properties in this price range, unless it’s a very small unit. But it also depends on locality; some areas may have properties selling for under RM300,000, and developers there might be affected,” he added.

MKH offers affordable housing but these sell for above RM300,000, so the company will not be affected by the new measure, said Chen.

“Investors are looking for properties with good potential for capital appreciation or rental yield in prime areas. Location is more important than price,” he added.

Chen suggested that the government should also consider reintroducing the Developer Interest Bearing Scheme (DIBS) for first-time homebuyers to reduce their burden.

Meanwhile, Mah Sing Group Bhd managing director Tan Sri Leong Hoy Kum lauded the measure as one that would boost home ownership.

On the optional 3% reduction in Employee Provident Fund (EPF) contribution for employees, Soam said it would “put some money back into the pockets of the rakyat”.

“It’s a consumer sentiment booster. People who are concerned about not being able to make their monthly repayments should feel less worried,” he said.

Leong said the option for employees to reduce their EPF contribution and the special tax relief of RM2,000 for individual taxpayers with a monthly income of up to RM8,000 will boost domestic demand and have a multiplier effect on the economy.

Other measures under the revised Budget 2016 tabled by Prime Minister Najib Razak yesterday include the offering of over 100,000 homes by the National Housing Department (JPN), 1Malaysia People's Housing (PR1MA), Syarikat Perumahan Negara Bhd (SPNB), 1Malaysia Government Employees Housing Programme (PPA1M), government and private agencies.

For the units in the People's Housing Project costing RM35,000 each, Najib said the government would offer financing at the rate of 4% per annum effective March 1 this year from an allocation of RM444 million. The participating banks are Bank Simpanan Nasional and Bank Rakyat,

“This initiative will benefit more than 10,000 house owners,” he said.