Budget 2023 comments: Property sector

The Real Estate and Housing Developers’ Association (Rehda) Malaysia president Datuk NK Tong

We applaud the measures to further ease homeownership amongst first-time homebuyers with the increased stamp duty exemption to 75% from 50% for residential properties priced above RM500,000 to RM1 million, which will end on Dec 31, 2023. This will complement the previously announced 100% stamp duty exemption for the memorandum of transfer for houses priced RM500,000 and below until end of 2025. The government’s generosity to only impose a RM10 stamp duty for transfers made by way of gift between family members is also deeply appreciated, and is expected to provide positive impact on the housing sector.

Currently, only transfers between husband and wife is given a full 100% exemption, while transfers between parent and child is given an exemption of 50%. Future homebuyers will also benefit from the RM3 billion allocation for Syarikat Jaminan Kredit Perumahan Bhd (SJKP) for 12,000 borrowers, which will surely provide some relief to those without a fixed income, such as gig economy workers.

Rehda also welcomes the government’s renewed commitment for the lower income group with RM367 million allocation for new Program Perumahan Rakyat (PPR) projects in Terengganu and Perlis, and RM358 million for Program Rumah Mesra Rakyat.

Collectively, this will benefit more than 16,000 B40 households. The measure to increase the allocation to construct and repair houses in rural areas from RM361 million to RM460 million, the increased ceiling rate to build new homes and the construction of 3,000 new homes including in Sabah and Sarawak further prove the government’s dedication to ensure quality living and homes for all Malaysians.

However, we appeal to the government to consider extending the 75% stamp duty exemption to all buyers and not just first-time house buyers as it will benefit wider pool of buyers especially the upgraders. Given the myriad of issues facing the construction and property industry as outlined in our Budget 2023 memorandum to the government, we had also expected the government to take bigger measures to alleviate some of these concerns, such as the hike in building material prices and labour shortage issues which are adversely affecting the industry. Despite this, Rehda pledges to continue our engagements and discussions with all industry players, and will still march ahead in our nation-building role of providing quality, affordable homes for the rakyat.

Mah Sing Group Bhd founder & group managing director Tan Sri Leong Hoy Kum

A welcomed measure is the exemption of 75% of stamp duty on the sales and purchase agreements (SPA) of properties priced between RM500,001 to RM1 million (signed by Dec 31, 2023). For instance, a 75% exemption on an RM750,000 property purchase will save the buyer up to RM15,000. This will pique the interest of middle-to-upper income first time home buyers as well as those who are looking to upgrade their property.

The 100% stamp duty exemption for first time homebuyers remain, applicable for properties priced RM500,000 and below, RM6,500 savings on an RM300,000 property purchase.

The government has made various allocations homes in rural areas and People’s Housing Projects, and private developers like Mah Sing can continue to serve the market with its affordable range of high rise and landed homes. These measures would be a timely catalyst in hastening the property industry’s recovery, in line with the general consensus that 2023 will be a better year for Malaysia.

With the government steering the direction, we believe all industry players and stakeholders will work together to ensure that the incentives ultimately benefit home buyers and propel the Malaysian property market to better recovery.

We applaud the government for increasing the stamp duty exemption from 50% to 75% for properties priced between RM500,001 and RM1 million with an SPA signed by Dec 31, 2023. For instance, a 75% exemption on an RM750,000 property purchase will save the buyer up to RM15,000. This will pique the interest of middle-to-upper income first time home buyers as well as those who are looking to upgrade their property.

We also appreciate the government’s announcement of a RM10 stamp duty for family property transfers, for example, between husband and wife, parents and children, as well as grandparents to grandchildren. This will alleviate the burden on buyers while encouraging housing transactions in the property market, which will boost the housing market during this trying time.

We applaud the government’s decision to reduce the individual income tax by 2% for the majority of taxpayers. This will increase the cash flow in hand, easing the financial burden on individuals and allowing them to make long-term plans such as property purchases.

LBS Bina Group Bhd (LBS) executive chairman Tan Sri Lim Hock San

LBS applauds the government’s measure to increase stamp duty exemption for first time home buyers from 50% to 75% on properties priced between RM500,000 to RM1 million until end-2023. In essence, this results in savings of up to RM21,000 from RM14,500 for a property priced above RM500,000. LBS views this positively as it stimulates home ownership and is beneficial for developments within these housing price bands, such as LBS, whereby its properties are typically within the RM500,000 range.

In light of rising inflation, the reduction of personal income tax rate by 2 percentage points for those earning between RM50,001 to RM100,000 is a welcome assistance for all. The additional income tax savings enable individuals to channel their income towards basic needs, such as home ownership and thus easing their financial burden.

To add on, LBS lauds the government for providing RM3 billion in guarantees under the Housing Credit Guarantee Scheme. The benefits for the lower-income households are positive as it encourages the realisation that owning a home is not beyond reach.

Budget 2023 has turned out to be positive through its inclusivity to provide relief for all. While the measures proposed for the property sector are minimal this year, they are indeed proactive in stimulating home ownership especially through the increase in stamp duty exemption for houses within the RM500,000 to RM1 million band range. Overall, we appreciate the government’s initiatives to continuously push for economic recovery and stimulate growth in the country.

CBRE | WTW chairman Foo Gee Jen

The property sector made a relatively neutral appearance as the general economical budgeting steered a different direction. Despite this unexpecting turn of events, the budget this year brought upon some impactful changes, some of which focusing on green technology, mental health and commute infrastructure. Initiatives as such will put the country far ahead as these are factors that will play a crucial role in developing our people in the long run.

Public transport and major infrastructure development projects will have the greatest impact on the property market. These included the Pan Borneo Highway and the Pengerang Area in Johor.

Following Petronas’ US$27 billion investment in Kompleks Petroleum Pengerang, the government will zone Pengerang as a special zone to encourage investment in petrochemicals. In addition, RM510 million is allocated to improve road infrastructure to Pengerang via the Senai Desaru Expressway.

Phase 2 of the MRT2 is expected to be completed by January 2023 and the start of the MRT3 was mentioned. However, the Park n Ride facilities for MRT is still problematic. To date, the current MRT1 line has a total of 8 stations and 4,697 parking bays.

The initial rollout of 5G for high-population-density locations will also positively impact the property market.

Homeownership continued to be supported by a 100% stamp duty exemption for houses below RM500,000, while a 75% stamp duty exemption will apply to house purchases of RM500,000 to RM1 million.

There were more incentives proposed for green initiatives. The Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) will be extended to Dec 31, 2025. Tenaga Nasional Bhd will also be committed to installing solar rooftops and EV charging stations, with a total investment of RM165 million till the year 2025. However, similar tax exemptions should be extended to domestic users for the installation of green energy-related systems, such as solar panels.

Safe to say this budget is a progressive continuation of Budget 2022 to support the recovery of our economy. Some areas could have been addressed for example shortage of workers and minimal encouragement of IBS usage in the construction industry and mismatch of affordable housing for the B40 segment. There is also an over-supply situation in the office, retail and high-rise residential sectors which has not been highlighted this year. Looking closer at the property sector, the neutral sentiments surrounding the industry leads to no new game-changing initiatives but there is much to reap out of what the government has announced as 2023 will be the year Malaysians bring cautious normalcy to their expenditure.

PropertyGuru Malaysia country manager Sheldon Fernandez

With the government putting forward RM55 billion for subsidies and incentives, we see that the government has recognised the need to address affordability issues among the rakyat.

Specifically, we applaud the government for announcing the initiative to allow first-time homeowners to be given up to 75% stamp duty discounts for properties worth RM500,000 to RM1 million until the end of 2023. This will hopefully encourage homeownership among first-time homebuyers and further spur the property market, as we have seen a dampened sentiment in the past two years.

Separately, we welcome the increase in the government allocation for new constructions and renovations of houses outside of the city from RM361 million to RM460 million. This aligns with PropertyGuru’s Consumer Sentiment Study H1 2022, as our respondents noted that they prefer living in the outskirts of the city following lifestyle changes and prefer more peace, greenery, better pricing, less densely populated areas, and larger homes.

Following the announcement of the targeted construction of 500,000 affordable housing units by 2025, we hope that the government will work closely with property developers to provide accessible homes for future homebuyers. We hope the government will take into consideration the needs of Malaysians to ensure that the low-cost housing projects being built will not go to waste and further contribute to property overhang issues in the country. We are also looking forward to the housing units worth RM358 million that will be built under the Rumah Mesra Rakyat programme.

We urge the government to consider incentivising developers to adopt accredited green certification tools to promote green development in the country and continue to push different industries to do their part in becoming more environmentally friendly.

Juwai IQI co-founder and group CEO Kashif Ansari

The two big surprises in this budget are the sheer size of the budget and the large share of that spending that will go towards programs that directly benefit the people – especially in the area of housing. This is the second largest budget ever, and it’s bigger even than last year’s budget. Yet, the government’s fiscal position will remain relatively strong since the fiscal deficit will likely be only 5.5% of GDP, which is lower than this year.

We welcome the government’s laser focus on the well-being of the people. In particular, we welcome the budget measures intended to make housing ownership and purchase more affordable and equitable across all parts of society. The budget dedicates RM2.1 billion directly to making housing more affordable and equitable, which accounts for about 2.2% of total spending.

The budget’s housing provisions include stamp duty exemptions, a housing guarantee for vulnerable workers, and the construction of subsidised new homes for rural residents and others.

The reduction of stamp duty to just RM10 on the transfer of property within families will help Malaysian families build wealth and financial security through property ownership. If one generation can pass their property down to the next, a family can create increasing well-being for themselves. Nothing helps you sleep better than knowing that you own your home.

The increase to 75% for the stamp duty exemption for property worth RM500,000 to RM1 million is one of those rare measures that will benefit both homebuyers and the housing industry. Buyers will benefit by saving RM15,000 on an RM750,000 purchase. The industry will benefit from increased demand for properties in this price range. This measure will reduce the supply overhang, stimulate much-needed new construction, and help many worthy families into their new homes. The new exemption complements the already in-place stamp duty exemption for houses worth up to RM500,000 until the end of 2025.

The dedication of an additional RM3 billion for the Housing Guarantee Scheme for gig workers, freelancers, and small biz/entrepreneurs will enable many more in this category to purchase homes. As people in these careers often have variable incomes from month to month, they can find it hard to obtain a mortgage. If you don’t help entrepreneurs to build new businesses, then they won’t take the extra risk upon their shoulders. By making it easier for entrepreneurs and gig workers to purchase their own homes, we can ensure this dynamic part of our economy continues to grow. The Scheme gives Malaysians working in the gig economy, small enterprises, online businesses, and similar careers a way to buy their first home, worth up to RM400,000, with a 35-year mortgage.

We think Budget 2023 is relatively complete and tightly focused on important goals, especially the well-being of the people and their fair and affordable access to housing. In many ways, 2023 will be a challenging year, with the lingering effects of Covid, global economic uncertainty due to inflation and high rates in many countries, and the pressures the Russian war is imposing on supply change and commodity costs. We wouldn’t say the government has missed anything in this budget.

We believe the current environment is a good one for homebuyers. Less new supply will come online in 2023 than in recent years, reducing inventory and increasing prices. The economy is relatively stable, and employment is climbing. The government’s budget will make it more affordable for many people to purchase their first home. Owning your own home provides a place to live and creates an opportunity to build equity. It is a route to wealth and security.

Ireka Corp Bhd group managing director Datuk Mohd Hasnul Ismar Mohd Ismail

With the largest infrastructure budget to date at RM95 billion to focus on the development and restoration of transportation networks and systems such as roads, Mass Rapid Transit (MRT) and bridges to enable mobility of communities and movement of goods nationwide, the budget will allow greater participation from rural communities in the growing world commerce and facilitate different commercial endeavours.

The government’s approach of placing importance on the challenges of home ownership and accessibility to affordable homes is commendable. The measures under the Budget 2023 such as the construction of 500,000 affordable homes across Malaysia by 2025, the allocation of RM367 million for the development of PPR in urban areas, and the allocation of RM358 million for the construction of 4,250 affordable homes under the Rumah Mesra Rakyat programme will be crucial to promote home affordability and inclusivity of home ownership, especially among the B40 and M40 communities. The increase of tax exemption to 75% for purchase of homes valued between RM 500,000 to RM1,000,000 will likely spur economic growth in the real estate industry, as the industry steer towards recovery from the aftereffects of the pandemic and sectoral lockdowns.

The introduction of Kontraktornita initiative and the absorption of veterans into the construction industry will feed more local talent into the ecosystem, and will contribute towards alleviating our nation’s labour crunch and dependency on foreign labour.