What to Expect from The Property Market in Malaysia During The Implementation of Short-term Economic Recovery Packages

If you are looking to buy a property in Malaysia, here’s a big opportunity you don’t want to miss. Malaysia is taking huge steps and making important decisions as attempts are being made to recover what’s been lost during the pandemic. The novel coronavirus has increased the number of unemployed citizens in Malaysia with unemployment rising to 5.5% [1]; this is affecting property owners and mounting pressure on the government. Malaysia was even close to a recession until the government came up with short and long term solutions. One of the solutions which the government has implemented during this uncertain time is the short-term economic recovery package (ERP).

On the 5th of June, the Malaysian Prime Minister Tan Sri Muhyiddin Yassin announced several tax incentives under the short-term economic recovery plan ‘PENJANA’ in a bid to save the real estate market and hopefully, the entire country. [2] The arrival of PENJANA was timely as the fear of recession was continuing to grow across the country. Already, the impact of the COVID-19 pandemic on property owners in Malaysia has been alarming. Thankfully, this incentive is aimed at triggering economic growth by easing homeownership and enabling property developers to sell more in the short term.

The ERT will cater to both the Home Ownership Campaign (HOC) and the real property gains tax (RPGT). According to a report from the brokerage, ‘Developers’, wishes have finally come true with the government announcing the Home Ownership Campaign (HOC) 2020, along with real property gains tax (RPGT) exemption and removal of 70% loan-to-value (LTV) ratio on third housing loan.[4] In a recent study, it shows that properties priced RM501,000 to RM700,000 and RM701,000 to RM1 million skyrocketed at 10.4% and 12.7% respectively. For condominiums, an increase of 23.5% was seen while service residences increased by 19.2%. 3.5-storey terraced homes saw an increase of (28.0%) whereas SOHO units increased by (20.0%). [1] All of these indicate that the interest-rate pattern for housing markets in Malaysia will continue to increase.

How does this property sector big beneficiary of PENJANA work?

First, the HOC will be reintroduced and throughout this campaign, offering stamp duty waivers on property transfers and loan agreements for Sales and Purchase Agreements of houses valued between RM300, 000 and RM2.5 million [2] signed from June 1, 2020, to May 31, 2021. Meanwhile, during this period, people who are considering buying a property will benefit a minimum of 10% discount from property developers in sought-after places such as Melaka. [3] New housing projects in places like Melaka will expect more buyers to start buying properties in the not-so-distant future.

The second incentive under the ERP would be Real Property Gains Tax (RPGT) exemption for the disposal of residential properties by Malaysian citizens from June 1, 2020, to December 31, 2021. [2] As a means of building the economy through the property sector, this COVID-19 stimulus package will trigger interest among Malaysian citizens. Thanks to this short-term economic recovery plan, property developers in certain places such as Melaka will see an increase in demand that will reduce the negative effects of the COVID-19 pandemic.

New housing projects can now be sold at a discounted price that will benefit both the property developers and Malaysian citizens. It is, therefore, a win-win situation for all. Encouraging the growth of the property sector was a smart move by the Malaysian government. The reintroduction of HOC will undoubtedly attract more buyers into the market since prices are less than usual. Moreover, this much-needed catalyst for the market is predicted to revive and increase demand for property developers around the country.

 

If you are looking for a property to rent or buy, you can now easily find the right property on Malaysia’s PENJANA project. People who are considering buying a property should take advantage of this short-term economic recovery package to acquire what they’ve been craving for. Together, we can build our economy and overcome this dreadful pandemic. Think property, think wise!

Reference URLs:

  1. https://www.propertyguru.com.my/property-news/2020/6/189108/propertyguru-thumbs-up-for-property-provisions-in-recovery-package
  2. https://www.malaymail.com/news/malaysia/2020/06/05/tax-reliefs-for-real-estate-automotive-industries-under-penjana/1872818
  3. https://www.edgeprop.my/content/1692240/rehda-incentives-under-penjana-aimed-easing-homeownership
  4. https://www.thestar.com.my/business/business-news/2020/06/10/property-sector-big-beneficiary-of-penjana

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