First time home buyers may hold back
KUALA LUMPUR: First time home purchasers may hold back purchases till they see the full 10 per cent house price reduction by developers, analysts say, as proposed in the Federal Budget 2019.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) mentioned this in reference to the policy of waiving all stamp duty charges for six months starting January 1, 2019 for first time purchases of homes valued between RM300,001 to RM1 million per unit as part of the National Home Ownership Campaign where developers will offer a minimum price discount of 10 per cent.
“A plus for first-home buyers while it also gives developers a chance to clear inventories; as it is, many developers focused their efforts on clearing inventories this year even if it means sacrificing margins,” Kenanga Research said.
“Interestingly, many players do offer to absorb some stamp duty charges currently, so the impact may not be as strong as expected.
“We are now concerned that firsttime home buyers may hold back purchases till they see the full 10 per cent house price reduction, implying that the fourth quarter of current year 2018 (4QCY18) sales could be weak for developers.
“Additionally, we are not sure if this is enough to meaningfully overcome the issue of securing the ‘ideal' margin of financings from the banks.”
Kenanga Research also noted on two other ‘first-time home owner' policies such as that for firsttime home-buyers purchasing residential properties priced up to RM500,000, the Government will exempt stamp duty up to RM300,000 on sale and purchase agreements as well as loan
A plus for first-home buyers while it also gives developers a chance to clear inventories, as it is, many developers focused their efforts on clearing inventories this year even if it means sacrificing margins. Kenanga Research
agreements for a period of two years until December 2020.
It highlighted that the other is on assisting the lower income group earning not more than RM2,300 per month to own a house for the first-time, a fund amounting to RM1 billion will be established by Bank Negara Malaysia, to help them to purchase affordable homes priced up to RM150,000.
Kenanga Research hoped that these measures will help increase home ownerships amongst the B40-M40 group and absorb the excessive overhang in this segment, which would be healthier for the sector in the longer run.
“Most developers under our coverage have exposures to units priced between RM350,000 to RM500,000 per unit, although noticeably, Mah Sing Group Bhd and Hua Yang Bhd have the highest exposure in this segment.
“We believe this measure helps increase the odds of them achieving their sales targets although margins ares likely to remain challenging due to earlier reasons mentioned.”
For the latter measure, Kenanga Research noted that while beneficial to the B40 group, it will not have much impact on the research arm's developers who typically priced their residentials above RM350,000 to RM400,000 per unit in urban areas.