Lower interest rates for home loans can help improve the property market

The key to improving the overall property market is the reduction of interest rates for home loans.

The other significant impact on the property market would be Real Property Gains Tax (RPGT) reform and reduction of stamp duty, this is based on findings from a recent survey by PropertyGuru Malaysia.

According to the PropertyGuru Malaysia Consumer Sentiment Study H2 2020, lower down payments and expansion in maximum loan tenures would also play a part in improving the market.

The study polled Malaysians on which aspects of the property ownership journey they felt required government attention during the Movement Control Order (MCO).

Reduction of interest rates for home loans recorded 81 per cent, RPGT reform 73 per cent, reduction of stamp duty 61 per cent, lower down payments 54 per cent, and expansion in maximum loan tenures 24 per cent.

PropertyGuru Malaysia country manager Sheldon Fernandez said many of these challenges have been addressed by recent national initiatives, with the revision of Bank Negara Malaysia’s (BNM) Overnight Policy Rate (OPR) to 1.75 per cent, which has brought down home loan interest rates nationwide.

The government’s Short-term Economic Recovery Plan (Penjana) announced recently also included provisions for RPGT and stamp duty exemption into 2021 in addition to discounts of 10 per cent and more via the reintroduced Home Ownership Campaign (HOC).

“The impacts of the Covid-19 outbreak are undeniable, and it will take time to get the economy back on track as many Malaysians struggle with the loss of income and employment. However, for those with financial buffers, this is the most conducive lending and policy environment that we have seen in recent years,” said Fernandez.

Fernandez said according to the study, Malaysians were most satisfied with BNM’s six-month financing moratorium, as reported by the majority (39 per cent) of respondents.

Also, Penjana tackled key homeownership challenges as cited by property stakeholders and home seekers, including high property prices and stamp duty.

“Young Malaysians and those from low-income backgrounds were most likely to cite satisfaction with measures introduced, due to the targeted nature of relief provisions in Penjana and other recovery packages. This is timely in light of a surge in homeownership interest among these demographics following months of restricted movement due to the outbreak,” he said.

Fernandez said the BNM moratorium was the right measure, over and above other initiatives such as Bantuan Prihatin Nasional financial aid and EPF Account 2 withdrawal revisions by a wide margin.

He said though the first phase of the moratorium ends next month, it has helped 43 per cent of participants rebuild financial buffers.

It also assisted 34 per cent of participants to manage their costs of living, and 16 per cent to redirect resources to alternative investments.

Source: NST