Home buyers, particularly first timers, may expect more goodies should the 2017 Budget include some key incentives.
These include an increased allocation of Employees Provident Fund (EPF) Account 2, relaxed loan assessment methods, reintroduction of the Developer Interest Bearing Scheme (DIBS) and more 1Malaysia People’s Housing schemes.
According to Kenanga Investment Bank Bhd, these incentives will help rejuvenate the property market, with the revival of the DIBS serving as a sentiment booster.
“While it does help ‘buy time’ before servicing the mortgage during the construction period, it however does not solve the issue of low margin of financing faced by many first-time house buyers,” it said.
“The issue is many developers tend to price-in the DIBS cost into the property price, resulting in higher prices.”
Kenanga underscored the biggest barrier for first-time buyers – financing. It noted that the budget should address the concern of the deposit and hidden costs, particularly when these buyers cannot obtain the full 10 percent margin of financing.
“It will be a game changer if first-time house buyers get a margin of financing of more than 90 percent or if the method of loan assessments for first-time house buyers is changed,” said the research house.
“However, we reckon it may take some time for Bank Negara Malaysia to study the long-term impact on banking risks.”
It also called for the increase of the EPF Account 2 allocation from 30 percent to 40 percent. The government could limit it to first-time home buyers to address concerns that it may revive speculation.
“We think this measure could be more meaningful compared to bringing back DIBS for first-time house owners,” said Kenanga.
“This will be quite helpful in servicing part or the full 10 percent deposit, or if one is unable to secure the full 90 percent margin financing.”
The research house also questioned whether it will be sufficient for robust sales growth, and whether investors will take profit upon any good news considering that the market remains challenging.
Kenanga does not expect the government to lower or remove the real property gains tax or raise the 70 percent loan-to-value cap on third home purchases as these address non-house ownership markets. It would also be detrimental to the primary market.
Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email mangales@propertyguru.com.my
