More properties to be auctioned next year

Dec 23, 2013 – PropertyGuru.com.my

Next year’s hike in real property gains tax (RPGT) rates and the ban on Developer Interest Bearing Scheme (DIBS) will likely see more property being auctioned in 2014, according to National House Buyers Association (HBA) secretary-general Chang Kim Loong.

“I will not be surprised if there will be a lot of properties for auction next year. I won’t be surprised because a lot of people who bought into properties for investment, they are now caught out with RPGT and DIBS,” he said in a SunBiz interview.

He noted that in case the property market slows down and buyers who acquired properties with DIBS are not able to pay their loans, ending up with their property being foreclosed; these buyers will not be able to repay their debts even after their properties have been auctioned while banks will not be able to recover the loan’s full amount.

“Assuming there is a slow down in the market, do you think the bank will finance 100 percent of DIBS at RM600,000 for a unit that is actually priced at RM500,000 without DIBS? The banks will also not be able to recover the RM600,000 (after the property is auctioned off) because they hiked it up in such a way for interest purpose,” explained Chang.

Notably, the banning of DIBS including any of its permutation is expected to stabilise the property market as well as bring speculation to a more realistic level since property prices will now be more reflective of the market value.

“From the last discussion I had with the Valuation and Property Services Department, they said the market has slowed down to a more moderate level and they expect that there will be a saturation point next year,” he said.

“I hope it becomes a reality and to a certain extent, first time house buyers will be able to buy into properties.”

Farah Wahida, Editor of PropertyGuru, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my

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