Budget 2021 should focus on job creation and income growth drivers to spur property market

There seemed to be pent-up interest for home-ownership, especially among youths and first-time home seekers, but unemployment and loss of income are stopping the majority of them from taking the next step.

PropertyGuru Malaysia hoped the government will focus on job creation and income growth drivers when tabling Budget 2021 next month.

The firm’s country manager Sheldon Fernandez said home-ownership interest has surged driven by a host of property incentives, but employment and income loss following the Covid-19 outbreak are hindering buyers from making property purchases.

Fernandez said property transaction volumes and values in Malaysia showcased V-shaped recovery curves prior to the recent Conditional Movement Control Order (CMCO).

He said along with marginal growth in the Malaysia House Price Index and PropertyGuru Malaysia Property Market Index, this underscores the resilience of the property market post-pandemic.

“In short, the current incentives for a property, as well as historically low-interest rates and a wide range of purchaser and seller incentives, have been sufficient to promote market recovery for property to date,” he said.

Fernandez said Budget 2021 should focus on economic recovery to ease the plight of the rakyat, and also address specific developer concerns such as compliance costs.

“Financial aid initiatives to assist Malaysians during the Covid-19 outbreak have proven popular and timely, with 39 per cent and 11 per cent of PropertyGuru Malaysia Consumer Sentiment Study H2 2020 participants citing satisfaction with Bank Negara Malaysia’s financing moratorium and Bantuan Prihatin Nasional (BPN) respectively.

“Moving forward, further emphasis should be placed on long-term job creation measures and economic drivers, particularly for younger demographics and the B40 income group,” he said.

Fernandez said, according to the same study (by PropertyGuru Malaysia), home seekers aged from 22 to 29 years old, and renters, are most likely to buy a property post-MCO, with 47 per cent and 51 per cent respectively sharing that the outbreak would not delay their potential purchases.

Reducing compliance cost surrounding developments such as related infrastructure costs ranks among the top on developers’ wishlist for Budget 2021.

Developers are also asking for more Home Ownership Campaign (HOC) incentives such as stamp duty and instrument of transfer exemptions to the secondary market, the possibility of extending maximum loan tenures, and reviewing eligibility criteria for home loan applicants.

Further, developers are hoping that the government will re-visit foreign ownership programmes and thresholds.

Fernandez said when it comes to reviewing loan tenures and eligibility criteria, financial institutions have their priorities in terms of risk management and minimising non-performing loans.

On developers’ concerns regarding compliance costs, he said, if addressed, would promote the ease of doing business.

“A review of foreign ownership guidelines may address overhang concerns to some extent, but is unlikely to be popular with Malaysian home seekers,” he said.

Source: NST