HOC extension till end-2021 a “strategic move” to ensure widespread impact on the economy

Extending the Home Ownership Campaign (HOC) till end-2021 will be quite strategic, says its organising chairman Datuk NK Tong.

Tong said the property industry has about 180-related industries that it impacts and ongoing activities can contribute to economic growth.

“It is about kick-starting the engine and getting the over 180 industries going to boost the economy. The government overall is helping in accelerated recovery. If we can continue to keep the property market buoyant until the end of the year that will be good for the overall economy.

“There is still some uncertainty on how the overall economy will recover into the second half of the year, so it will be both strategic and prudent of the government to extend the HOC to ensure a positive widespread impact on the economy.

“We think it is appropriate to do that as we missed out on selling properties in January and February this year because the government took to imposing the Movement Control Order (MCO) 2.0. This dampened the buying mood so there were hardly any sales recorded in those two months. The economy was quite cooped up because of MCO 2.0,” he told NST Property.

Tong, who is also Real Estate & Housing Developers’ Association (Rehda) deputy president said there is only April and May till the HOC expires again and he believes that these two months will be quite robust due to the ongoing vaccination programme.

“Because of the vaccine, all the mood is a little bit more optimistic as we put the pandemic behind us. Even though it is another six to nine months before the majority of Malaysians are vaccinated, they can see the trajectory is towards recovery. There is more certainty now with all the vaccines. By that time hopefully can remove the incentives as the economy is back on track,” he said.

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said during the launch of the Property Market Report 2020 that the real estate sector is expected to recover in line with the projected economic growth of between 6.0 per cent and 7.5 per cent this year.

He said growth will be driven by the government’s economic focus and strategy where the implementation of the National COVID-19 Immunisation Programme will enable more economic sectors to operate and also revive the labour market.

Meanwhile, Tong said with the HOC, he believes the results will be better this year in terms of the value and volume of property transactions.

The HOC was introduced in 2019 to stimulate the property buying process and the sale of unsold residential properties.

By late 2019, Malaysia’s property overhang totalled RM41.5 billion with residential properties contributing to 45 per cent of the overhang.

The HOC had been successful in reducing the property overhang value and volume.

In the 12 months to December 2019, RM37 billion worth of property sales were recorded.

Tong revealed that RM37 billion was based on the Sales & Purchase Agreement price but without discounts given to purchasers under the HOC, total sales would have exceeded RM40 billion.

There was no HOC between January 1, 2020, and May 31, 2020, because the previous one expired on December 31, 2020.

However, because of the ongoing Covid-19 pandemic, the HOC was re-introduced on June 1, 2020, and extended until May 2021, as part of the Short-Term Economic Recovery Plan (PENJANA) by the government.

Rehda revealed that from June 1, 2020, to February 28 this year, total gross sales recorded from HOC 2020/2021 was RM25.65 billion (34,354 residential units were sold).

According to Tong, net sales for the period between June 1, 2020, and February 28, 2021, were around RM21 billion.

The top three selling properties were double-storey terraced houses, serviced apartments, and condominiums, with the majority of them priced below RM750,000.

For the total number of units sold, 37 per cent comprised properties ranging between RM500,000 and RM750,000, and 26 per cent were those priced from RM300,000 and RM500,000.

About 19 per cent of the total properties sold were priced at RM750,000 to RM1 million.

During the HOC, homebuyers get full stamp duty exemption on the Instrument of Transfer for residential properties up to RM1 million and a partial stamp duty exemption (three per cent) for those priced between RM1 million to RM2.5 million.

The stamp duty on the Instrument of Securing Loan will also be exempted for residential properties worth up to RM2.5 million.

Homebuyers will also enjoy a minimum of 10 per cent discount on the purchasing price, with some developers offering as much as 30 per cent depending on the property type and location.

Rehda president Datuk Soam Heng Choon said that the HOC had been instrumental in pushing sales through despite the pandemic and MCO imposed by the government in March 2020 to curb the spread of the virus.

He said at a recent media briefing that it would be impossible to match the total sales achieved in 2019, given that MCO 2.0 was implemented in January this year and there were very limited or no transactions in that month and also in February.

“If there was no MCO 2.0, we could have achieved higher sales up to February this year. But the situation has improved and sales are coming in after the MCO was eased. The campaign will end in May and we hope the government will extend it,” Soam said.

Soam said besides extending the HOC to December 2021, there are other incentives the government can introduce to help homebuyers such as re-introducing the developer interest-bearing scheme (DIBS) in a regulated manner and allow a 90 per cent loan margin for the third home purchase.

Source: NST