In a blink of an eye, the year is fast approaching its end, and the air is bustling with holiday cheer. Indeed, there are plenty of reasons to call for a celebration – one of which would be the major events within the property sector in Malaysia for the past year.
Let us take a look at the major milestones and a quick market overview of the industry before saying goodbye to an amazing year!
2019 Market Overview
Mega Infrastructure Projects Greenlit
Possibly the most exciting news of the year for the property sector is seeing several mega infrastructure projects revitalised, those being Bandar Malaysia, East Coast Rail Link (ECRL), Mass Rapid Transit Line 2 (MRT2) and Light Rail Transit Line 3 (LRT3).
Although there are talks about these projects being greenlit earlier this year, there is still plenty of uncertainty about whether these projects will actually go through, seeing that these projects have been shelved to reduce the national expenditure.
However, with the Budget 2020 announcement in October, the government has announced that they will be allocating government funds into these projects, cementing the fact that these projects have been issued the greenlight.
With public transport projects revitalised, we can expect better connectivity within Klang Valley, and more LRT and MRT stations. Properties that are situated near these stations would see a significantly higher demand, which will translate to higher property prices for property investors.
Some projects, such as Binastra’s Trion has been seeing enormous demand and success in anticipation for the completion of the Bandar Malaysia project. This will lead to a surge in demand for properties within the surrounding region as well.
Robust transactions within the residential sector
In October, FIABCI Malaysia President Michael Geh said the Malaysian residential property market had recorded RM14.65 billion worth of transactions in the primary market between January and September in 2019.
Not taking into account transactions for the remainder of 2019, this figure is already significantly higher than the total transaction value of RM12.91 billion for the primary market for the whole of 2018.
Geh also said that the total value of transactions for the first half of 2019 is RM34.65 billion, which is even more than the RM31.66 billion recorded in the same period last year.
He attributes this growth to the Housing and Local Government Ministry and Finance Ministry being proactive in consulting stakeholders in the property sector to come up with effective policies for the industry.
A significant contribution to the increased uptake in the residential property market would be due to the Home Ownership Campaign, which at first, was scheduled to end at 30th June 2019, but was further extended to 31st December 2019.
The rise of Rent-to-own (RTO) schemes
RTO schemes are not exactly new. Government agencies such as the 1Malaysia People’s Housing Programme (PR1MA) have already introduced such a programme back in 2014.
However, due to the ever-increasing housing glut issue, as well as the home affordability and supply mismatch, RTO schemes have been pushed back into the limelight, establishing its growing importance in the eyes of homebuyers as well as government officials.
In fact, the federal government has plans to roll out their own rent-to-own (RTO) scheme for housing projects up to RM500,000 by January next year, says Jagdeep Singh Deo, State Housing, Local Government and Town and Country Planning Committee chairman.
The RTO scheme plans to tap into the use of their RM10 billion funding to purchase existing housing units, then rent out to first-time homebuyers whereby they would pay rent for a certain time period before they get ownership.
In fact, early this year in February, The Housing and Local Government Ministry announced a pilot FundMyHome+DepositKu scheme to ease homeownership among the B40 group, enabling first-time homebuyers under FundMyHome to obtain a loan of up to RM30,000.
Under most RTO schemes, buyers have to fork out 20% of the purchase price to own a home without a bank mortgage and monthly repayments. However, most buyers will find it challenging to secure the 20% deposit, hence the implementation of the DepositKu Scheme.
Overall, the Malaysian property market has shown tremendous growth within the primary residential market due to the government’s involvement in promoting transactions and approving megaprojects within the region.
However, the Home Ownership Campaign shows no signs of extending into the year 2020. Many industry players were calling for more incentives to buy properties from the sub-sale market, and boost transaction rates within the region.
During the Budget 2020 speech, it was announced that the base year of the Real Property Gains Tax (RPGT) had been moved forward from 1st January 2000 to 1st January 2013. This makes selling properties within the sub-sale market much less taxing.
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