Malaysia Real Estate | Budget 2014 Malaysia Conundrum | What is there for real estate?

Scenario: Number of my investors are asking me on whether should they proceed with purchase of new development or sub-sale properties at the moment? 

My answer to them is why not wait for the budget 2014 to be announced first before you take any action(afterall is only one week to go) so that you've a clearer pictures on how property market going on then.

By next Friday, 25-Oct-2013 Malaysian will again vis-a-vis the 2014 budget (you can follow via #Bajet2014) that will be tabled. It has been quite a number for speculations of what are going to announce then. As from the perspective of Malaysia's real estate sector the following might be affected:

(1) #DIBS (Developer Interest Bearing Scheme): As we're awared our neighbour(Singapore) has banned on DIBS since 2009. The Malaysian government might follow the same path.

(2) #RPGT (Real Property Gains Tax): There has been talked around that RPGT will be increased from current of 15%(for first two year upon signing of SPA) and 10%(from 3rd to 5th-year upon signing of SPA) to 30% and 15% respectively. Reason behind this move is that the RPGT can be effectively use to curb speculation on property by flipper or investor that looking for short term gains.

(3) #Stamp Duty: As been mentioned the current scale of Stamp Duty for property transaction will be increased from the current of 1%(up to RM100,000.00 purchase price) and 2%(from between RM100,000.00 and RM500,000.00 purchase price) and 3%(RM500,000.00 and above). The quantum of increase will be reveal then.

(4) #GST (Goods and Services Tax): Currently real estate agents are charging 6% GST for their services. It has not been implemented in all sector of industries. With this budget there might be a chance to implement across other industries. At present, we're paying a sales tax of 10% and 6% in service tax(as charge by McDonald Restaurant outlets).

(5) #LTV(Loan-To-Value): Reducing loan-to-value cap for a second property would affect genuine upgraders, who may find it challenging to pay a higher downpayment while waiting to sell their existing properties. This could reduce supply to the secondary market.

PS: Rising #RPGT and #Stamp Duty could risk pushing house prices higher as sellers would tend to pass the increemental costs to buyers and also delay disposal leading to even tighter supply. Developers will also hold back launches in view of weaker sentiment. This could reduce supply to the primary market.

This article has been written by VULCAN INT'L Real Estate Research Institute http://www.vulcanresearch.blogspot.com for VULCAN INTERNATIONAL Real Estate Investors Club http://www.vulcaninternational.blogspot.com .

VulcanInternational could be contacted at +6 016 451 1321 .

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