Country Manager of PropertyGuru, Sheldon Fernandez on Budget 2020
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While not property-centric, Budget 2020 has nevertheless given developers, home seekers and other industry stakeholders reason to look to the future with some hope.
The inclusion of specific provisions targeting issues such as first-time homeownership and the country’s residential overhang, such as the extension of the Home Ownership Campaign, are much-needed steps in restoring confidence in mid-range housing as well as the residential sector as a whole.
Meanwhile, the Budget’s rent-to-own allocations, as well as the extension of the Youth Housing Scheme to next year, serve to ease the burden on the B40 segment as well as younger home purchasers.
Labour-centric provisions and reform, along with macroeconomic boosters will raise overall income for Malaysians, tackling affordability from the bottom up. However, this is a long-term play which will take time to impact home seekers.
Budget 2020’s focus on education, including funds to upgrade existing schools with new ones to be built in Langkawi, Kulai, Hulu Langat, Putrajaya, Pasir Gudang, Tumpat, Marang and Johor Bahru is good news for surrounding properties.
Similarly, “face-lift” provisions such as allowances to repair and refurbish low and medium-cost strata public housing, as well as the Safe City Initiative, are feel-good factors for property as a whole.
Provisions and feasibility studies for Carey Island in Selangor and the Kota Perdana Special Economic Zone in Kedah would have catalysing impacts on economic activity in surrounding areas, but their impact on property would be muted in comparison to megaprojects such as the MRT and KL-Singapore HSR.
Infrastructure provisions such as discounts and abolishments of tolls along PLUS highways, as well as electric buses in some cities and petrol subsidies across the board, would facilitate and improve connectivity, with trickle-down effects for property, though maintenance of routes must be upheld for the policy to be effective in the long run.
The allocation of RM10bil for rent-to-own schemes for first-time home seekers is a step in the right direction, as an alternative financing platform to help home seekers with the upfront costs of purchasing a property. In addressing home financing challenges among Malaysians, PropertyGuru also advocates active financial health management through the use of financial eligibility tools such as PropertyGuru Home Loan Pre-Approval, which applicants can use to check their home loan eligibility ahead of time.
In addition, the extension of the Youth Housing Scheme to 31 December 2021 will help younger purchasers in owning their first homes, addressing a demographic in need.
The move to reduce the foreign ownership threshold from RM1 million to RM600,000 is an interim measure to address the ongoing residential overhang in the country. However, domestic sentiment must be balanced against the short-term benefit of reducing the oversupply, as an external intervention is not an ideal solution.
Finally, the revision of the base year of acquisition for RPGT from 1 January 2000 to 1 January 2013 will soften its impact on sentiment at higher tiers of the market. However, its continued application will be a concern for investors and other stakeholders in the property value chain.