Budget 2017 will be muted for property sector: Kenanga

KUALA LUMPUR: Budget 2017 will continue to be “rakyat-centric” and remain relatively muted for the property sector, said Kenanga Investment Bank Bhd head of equity research Sarah Lim.
“Budget 2017 will still be very ‘rakyat-centric’ where goodies will be given out under government housing schemes and if we are lucky, additional subsidies for government affordable housings. We do expect BR1Ms to be given out as well. But such measures will not have any significant impact for our universe of developers,” she said during her presentation at the Malaysian Property Summit Mid-Year Review 2016 yesterday.
Lim said in terms of monetary measures, Kenanga’s house view is that the Overnight Policy Rate (OPR) will remain for now and further cuts, if it happens, are unlikely to spur lending to the property sector.
“We think adjustments to the 70% loan-to-value (LTV) ratio cap on third home purchases are also unlikely, as those who are buying third homes are investors/speculators rather than genuine home buyers, so increasing the LTV cap may send the wrong message to the rakyat,” she added.
Lim said lowering or removing the real property gains tax (RPGT) would be detrimental for the property market as it may cause a panic-sell, which would further exacerbate the oversupply situation.
She said an increase in the withdrawal limit from the Employees Provident Fund (EPF) Account 2 (30% of EPF account) could help increase home ownership substantially.
“However, such action may require long-term studies by EPF due to long-term repercussions on future retirees,” she said.