Real Estate and Housing Developers Association (Rehda) president Datuk Seri FD Iskandar Mansor (DSIM) speaks on the local property market.
Q: What is your view on the various measures announced by the government to curb speculation, such as a rise in the real property gains tax (RPGT), the removal of the developers interest bearing scheme (DIBS) and foreign ownership threshold?
On RPGT increase
DSIM: The increase may help curb speculation to some extent, but not in all locations, especially prime areas. We do see an impact in the primary and secondary markets following the RPGT increase, particularly genuine buyers who may want to upgrade or relocate within the first five years of acquisition.
You can see a downward trend now. I have no problems if the government wants to penalise speculators, but don’t do it at the expense of genuine buyers. Don’t penalise first-time house buyers or real home purchasers and also investors. I would like Bank Negara Malaysia and the government to re-look the RPGT on a case-by-case basis. It is in our culture to own a few houses to pass down to our children and as an investment for their education.
On DIBS removal
DSIM: The real reason for the DIBS home financing package by some developers was to facilitate home buyers in their acquisition cost during the initial stage of a purchase.
We believe that removing DIBS will hurt genuine buyers, especially first-time home buyers. I believe it is unfair to remove the DIBS. It is difficult for first-time home buyers to come up with a 10 to 20 per cent downpayment.
I hope the government will allow DIBS to be continued, at least for first-time house buyers and not limit it to properties worth RM400,000 and below.
On the higher foreign ownership threshold
DSIM: I don’t think there will be a major impact on the property market as houses currently are already worth that much, especially in prime locations in the Klang Valley, Johor and Penang, as well as Perak and Sabah. These are areas where foreigners buy properties. Nevertheless, the imposition will certainly reduce sentiments from foreign buyers and affect foreign property investment in the country and there may be foreign exchange losses.
Q: What is your take on the implementation of Goods and Services Tax (GST) next year?
DSIM: Rehda has submitted a memorandum of understanding to the Finance Ministry on the impact of the GST on the public at large.
In its current form, we feel it will impose further hardship to consumers and there will be an increase in house prices. At present, land and property transactions are subject to a stamp duty averaging 2.75 per cent. The GST will result in double taxation and inevitably lead to higher cost of property transactions.
With the implementation of GST, stamp duty on transfer of properties should be abolished or lowered to reduce the burden on property buyers. We have proposed a GST model for the housing market. For properties priced between RM100,000 and RM400,000, we have proposed for it to be zero rated.
Q: What is your outlook for 2015?
DSIM: It is not possible to lower house prices because of an increase in the cost of doing business. As it is, house prices in selected locations have gone up by between five and 15 per cent. In locations such as Mont Kiara and Bangsar, house prices have increased by more than 15 per cent. More than 99 per cent of the time, when you buy a house, the price will increase. As we speak now, house prices are increasing, so it is always a good time to buy.
To stabilise house prices, we need to increase the supply. Since October last year, a few measures unfolded with the reinstatement of RPGT, removal of DIBS, affordable housing initiatives by the government and higher price threshold for foreign buyers.
Since then, launches and take-up rate have gone down. With the cooling measures announced, we anticipate some impact on the property market.
Although the budget is tailored to promote a more stable and sustainable property market, all these measures will inevitably bring some major changes in both the demand and supply sides of the equation.
With the various measures put in place, I don’t think property transactions can pick up next year. We will see an increase in property transactions just before the GST is implemented as people would rush to buy.
Once the GST is implemented, there will be a slowdown again, at least for six to nine months.
The biggest market currently is for houses priced between RM150,000 and RM200,000, followed by properties worth between RM200,000 and RM400,000, and we believe that trend will continue next year.
Q: What is your view on affordable housing?
DSIM: It was announced in the 2014 Budget that RM1.9 billion has been allocated to build 123,000 affordable homes. In foreign countries, it is the government who takes on the role to build affordable houses. As a developer, we are not running away from building affordable house. We want to be there and help but because of scarcity of land and the high cost of construction, it is becoming difficult for us. The state governments have a lot of good land and perhaps, they should free up some parcels for us to develop. This could help to reduce the cost of constructing each home.
Affordable houses should also be near public transportation and amenities. They should be well-connected to the LRT, MRT and monorail, for example.
