Budget 2014: Malaysians Are Calling For Higher Stamp Duty And Taxes Imposed On Foreign Buyers And Investors
The Budget 2014 was finally unveiled on 25th October 2013. A two week online survey about the Budget 2014 which was conducted by iProperty.com Malaysia, the country’s No.1 property portal, revealed what Malaysians were hoping the budget will deliver.
The 2 weeks online survey findings revealed that 74% of respondents felt that foreign property buyers and investors are driving up property prices in Malaysia.
“Malaysia is very liberal in terms of ownership of property by foreigners. Compared to neighboring countries, property prices in Malaysia are relatively low. With the Malaysia My Second Home (MM2H) scheme, which has since attracted more than 12,000 applicants, it’s not surprising that Malaysians feel that foreign property buyers and investors are driving up property prices in the country,” explained iProperty Group’s CEO, Shaun Di Gregorio.
In response to addressing this, more than 90% of respondents stated that they want the government to impose higher stamp duty and taxes on foreign buyers and investors that intend to purchase property in the country.
Gathering over 1,000 respondents, the survey findings revealed that in relation to the property market, 47% of Malaysians want to see the government deliver better control on house prices, while 31% were tie at wanting better public transportation and more low cost and affordable housing schemes introduced. Not surprising that 30% of respondents want the government to introduce more efforts to address the rising levels of crime in the country.
The Malaysian government is currently looking at reducing the national debt of over 53% of gross domestic product (GDP) and decreasing the country’s deficit to 3% of GDP by 2015. Industry leaders were also hoping that Budget 2014 will address the fiscal position of Malaysia to prevent further downgrades as made by global rating agency, Fitch Ratings.
He added that in relation to rumors that there could be a possible increase in the Real Property Gains Tax (RPGT) to curb speculation, 54% were divided in their response on wanting the RPGT to be increased and being fine with the way it is. Only 39% of respondents wanted to see a decrease.
The RPGT was raised last year from 10% to 15% for properties sold within two years of purchase. For properties sold between two and five years, there was increase from 5% to 10%.
“While the move to increase the RPGT was to curb speculation and to discourage people from buying and selling houses for quick profit, the current levels have not been effective. According to some market analysis, in the last two years alone, prices of houses in some areas of the Klang Valley have increased by between 15% and 30%,” said Di Gregorio.
In relation to property prices becoming increasingly difficult for property buyers under the 30 age bracket, close to half of respondents would like the government to introduce other effective schemes by taking into account affordability, inflation and review of current income levels and then introduce other effective schemes.
“With property prices averaging around RM700, 000 in the Klang Valley, it is becoming increasingly difficult for the younger generation to afford a property. So it is not surprising that the people want the Malaysian government to step up their efforts in making housing more affordable,” said Di Gregorio.
Barely a month since the government announced an increase in fuel prices, an astounding 84% felt that property prices, especially for new developments will also increase with 71% saying the price will increase up to 10%.
When asked how far they think the government should go in terms of managing the property market, close to half (44%) expressed that they want the government to maintain property prices at an affordable average while 35% want to see measures to slow down the rate of increase in property prices since a rise in inevitable.
The House Price Index by the National Property Information Centre showed that in 2011 and last year, the house price index had recorded the highest increase in the last five years, especially in Selangor, Kuala Lumpur, Penang, Pahang, Sabah, Perak and Terengganu.
As part of the government’s efforts to bring down the fiscal deficit to 3% by 2015 and create a balanced budget by 2020, 60% of respondents felt that the implementation of the Goods and Services Tax (GST) will not help.
“Whatever it is Budget 2014 has unveiled, in relation to the property market, Malaysians are calling for better home financing policies, better housing schemes and for the government to make it easier for low-and medium-income earners to own affordable houses, concluded Di Gregorio.