Additional condition to housing policy, says deputy minister

source:http://www.starproperty.my/index.php/articles/events/buyers-must-register-when-they-purchase-more-than-four-residential-houses-says-deputy-minister/?utm_source=TSOL&utm_medium=widget&utm_campaign=buyers-must-register-when-they-purchase-more-than-four-residential-houses-says-deputy-minister

By MELVIN CHOW
melvinchow@starmedia.my

(From left) Real Estate & Housing Development Association president Datuk Seri Michael Yam, Ministry of Urban Wellbeing, Housing and Local Government deputy minister Datuk halimah Mohamed Sadique and Star Publications Berhad group chief executive officer Datuk Seri Wong Chun Wai visiting one of the 30 exhibition booths in the StarProperty Fair 2014 launch at Setia City Convention Centre

SHAH ALAM: The Ministry of Urban Wellbeing, Housing and Local Government of Malaysia today announced the “registration on bulk purchases of residential units” as an additional condition in the advertisement and sales permit for housing development at the launch of the StarProperty Fair at the Setia City Convention Centre in Selangor.

“Any developer who sells more than four units of houses to one buyer must register the buyer with the ministry,” said the ministry’s deputy minister Datuk Halimah Mohamed Sadique.

“It is hoped that with these measures, the Government will be able to curb speculative activities, which is one of the main causes of the rapid increase in house prices,” she added commenting on the additional condition that has taken effect immediately.

Since its debut in 2009, the StarProperty Fair has been a platform for developers to showcase an array of medium to high-end property developments ranging from bungalows to condominiums and commercial units.

The launch saw the participation of approximately 30 exhibitors who will showcase their latest property developments to visitors.

Among the participating exhibitors are some of the nation’s top developers such as Mah Sing Group Bhd, Eco World Development Sdn Bhd, Tropicana Corporation Bhd, Sime Darby Property Bhd, OSK Property Holdings Bhd and Gamuda Land Sdn Bhd.

Visitors can also benefit from property investment tips by industry experts and attend talks related to current market and property trends, among others.

The speakers lined-up for the three-day fair are MCT Group of Companies executive director Datuk Danny Goh Meng Keong, Loanstreet managing director Jared Lim, Jiao Tong University lecturer Professor David Koh, Ho Chin Soon Research’s Ishmael Ho, REI Group of Companies chief executive officer Dr Daniele Gambero, Indian feng-shui expert Dr T. Selva, Axis REIT Managers Bhd chief executive officer Datuk George Stewart LaBrooy and Malaysia and Singapore Tax Cases Digest author S. Saravana Kumar.

The fair’s opening launch was also graced by Real Estate and Housing Developers’ Association (Rehda) president Datuk Seri Michael Yam.

StarProperty Fair, which opened today will end on June 1, 2014 and is open to the public from 11am to 7pm.

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Malaysia’s residential property sector enters cooling phase

source:http://www.starproperty.my/index.php/articles/property-news/malaysias-residential-property-sector-enters-cooling-phase/

“The macro-prudential measures implemented by Bank Negara to cool down the property market since 2010 look likely to have played a role here,” Mier said.

PETALING JAYA: The residential property segment, a sub-sector of the overall property market, appears to have entered “a cooling phase” in the first two quarters with sales expected to stay “moderate” for the coming third quarter, according to the Malaysian Institute of Economic Research (Mier).

“The macro-prudential measures implemented by Bank Negara to cool down the property market since 2010 look likely to have played a role here,” Mier said.

Mier based its conclusion after doing a residential property survey designed to be an indicator of economic activity in the property sector.

Its Residential Property Index fell for the second quarter to 109.9 points, slipping 1.3 points from the first quarter, and 28.3 points from a year ago.

The survey also showed that total unsold new residential properties have accumulated faster than sales in recent months.

More than a quarter of house builders reported bigger stocks in hand, which is at a three-year high.

The Mier report said that given the built-up in total unsold new units, those surveyed have decided to keep creeping prices at bay by maintaining them at current levels.

But in the months ahead, prices “are likely to escalate again” more than half of those surveyed said while the remainder said they will “neither raise nor slash theirs (their prices) for now.”

Fewer of them increased prices in the second quarter compared with the first and some even offered price cuts, the survey found.

Moving forward, about half of those surveyed expect sales for the current third quarter to remain the same while more than a third of those surveyed foresee higher sales as “home buyers bought ahead of the Goods and Services Tax” which will come into effect next April.

Property prices are envisaged to rise due to higher input costs after that.

Double-storey houses continued to be the most popular while none of those surveyed seem to have sold any bungalows during this same period.

The survey concluded that affordability issues may continue to haunt the market if property prices outpaced income growth and interest rates edged up.

“Housing demand may eventually lose ground,” Mier said.

How GST Will Impact Home Prices & The Property Market

source:http://www.starproperty.my/index.php/articles/investment/how-gst-will-impact-home-prices-the-property-market/

BY LOANSTREET INSIGHTS
How GST Will Impact Home Prices & The Property Market

 

WITH the coming implementation of Goods & Service Tax (GST) in April 2015, many Malaysians are concerned with what this bodes for prices in general. It is inevitable that home prices will also be affected. In this article, we explain how home and property prices will be affected moving forward.

To properly appreciate how GST will affect home prices, it is necessary to first understand how GST works. (Click here for a detailed but simple-to-understand explanation of how GST in Malaysia works).

Aside from GST, one must also have an understanding of the Sales Tax, which is the existing tax scheme affecting the property sector. GST will supplant the Sales Tax come April 2015.

Tax Scheme on Residential Property – The Similarities

In comparing both tax schemes, we have to first identify their similarities.

One similarity between GST and the existing Sales Tax scheme is that no taxes are charged or will be charged to the consumer on the purchase of a home / residential property. For GST, residential properties fall under the “Exempt Rated” basket of goods. (But do take note that GST will be charged to the consumer for commercial property purchases as commercial properties are “Standard Rated”).

However, during the creation of the final product (also known as the input stage in tax parlance), under both tax schemes, developers would incur taxes during procurement of their inputs and materials. And this is where the differences start to become apparent between both tax schemes. The tax rate for inputs and materials vary between GST and Sales Tax.

Sales Tax VS GST for Residential Properties – The Differences

Based on the Sales Tax Act of 1972, basic building materials such as bricks, cement and floor tiles fall inside First Schedule Goods, in which all the goods in this category will not be subjected to sales tax. Meanwhile, other building materials fall inside Second Schedule Goods, in which all the goods in this category will only be charged sales tax of 5%.

Under the new GST implementation, all building materials and services (E.g. Contractors, engineers) will be subject to GST with a standard rate of 6%. This will invariably raise the production cost for developers.

If you understand how GST works, you will notice that in most cases, the additional tax cost is simply passed on to the final consumer (Standard-Rated goods), or is claimed back from the government (Zero-Rated goods). But in this case (Exempt-Rated), the additional tax cost is borne by the party before the final consumer – The developer.

The developer does not have a next “victim” in the supply chain.

This seems like good news for home buyers as they do not have to pay GST when purchasing a home. However, one should not be too happy about this. It is no stretch of the imagination to think that developers would try to build in the additional tax costs into the final sale price implicitly.

Before & After GST – A Comparison

The tables below show a comparison between the cost of a new property before and after GST. Certain taxes and costs leading up to the sale to the final consumer have been simplified for this purpose.

Also, an assumption is made that developers are able to transfer 100% of all incurred tax costs over to the consumer via the sale price.

How GST Will Impact Home Prices & The Property Market How GST Will Impact Home Prices & The Property Market

The example above shows a price increase of 3.41% for new residential properties post-GST implementation. But there is a plus point to this.

Overall, new residential properties may register a lower overall increase in tax burden compared to Commercial Properties that are Standard-Rated. This is because there still is the chance that developers may only transfer some and not all of their tax cost increases into the final retail price.

The downside to this is that where pricing for new commercial properties will be cleaner (Sales Price + GST), pricing for new residential homes would look inflated. This, in turn, will undoubtedly have a knock on effect on prices in the secondary house market.

Conclusion

As a home buyer, it pays to know what the implementation of GST might bode for home prices moving forward. If you skipped the entire article, here are all the key insights in a nutshell:

1)      With GST, there should be a once-off increase in property prices across the board

2)      While developers may not bill home buyers for GST, they could transfer the costs implicitly via the sale price

3)      The overall price increase for new residential properties could be marginally lower than that for new commercial properties

4)      The secondary home market should see a knock on effect in prices

Armed with this knowledge, you can make a better decision on when to purchase your home.

KL-S’pore high speed rail will create slew of new industries

source :http://www.thestar.com.my/Business/Business-News/2014/09/01/Impact-of-high-speed-rail-on-economy/

Chen:’Perception and reality do not match, but perception is playing an important role.’ (File pic)

Chen:’Perception and reality do not match, but perception is playing an important role.’ (File pic)

KUALA LUMPUR: The different sectors of the economy must leverage on the high speed rail (HSR) project currently being planned between Kuala Lumpur and Singapore, said MKH Bhd managing director Tan Sri Eddy Chen.

He said long-term planning was crucial and highlighted the Japanese example of how its shinkansen (high speed rail) opened up new integrated townships along its route.

Speaking at the “Invest and succeed in mixed use development” seminar organised by Malaysia Property Inc last Thursday, Chen, who is also Malaysia Shopping Malls Association president, said the connectivity would help to create a slew of new industries.

Sungai Buloh-Kajang Mass Rapid Transport (MRT) has changed the real estate scene in Kajang, the HSR is expected to be an even greater game changer, he said.

Land prices around Kajang has increased from RM7-RM8 per sq ft to RM17 per sq ft as a result of the MRT.

Chen said: “It does not seem to matter to them that the MRT is scheduled for completion only in 2017. The MRT has helped to close the gap between the city and Kajang. We are seeing Kajang apartments now selling between RM400 and RM500 per sq ft. These are prices at Mont’Kiara and Seri Hartamas.

“Perception and reality do not match, but perception is playing an important role,” he said.

He said every town that the HSR would be passing through has the potential to be turned into an integrated city.

Chen advocated working towards marketing Seremban as an enterprise or tech valley or regional headquarters for biotechnology because it is near research and training centres. Malacca’s tourism potential can be strengthened as visitors need not drive once the HSR is operational.

He identified car rental and clipper buses services that offer several hop on-hop off stops.

Visitors may continue their journey to Singapore after that.

The HSR would make such day trips spontaneous. There would be a need for malls, new hotels and other forms of rental arrangements and location logistics services, he said.

On whether the HSR would benefit Singapore or Malaysia more, Chen said Singapore would benefit from any development around it.

Another speaker, CB Richard Ellis executive chairman Chris Boyd characterised the Klang Valley’s office market as “an abundance of choice at low prices”, resulting in a flight to quality.

While the office glut has been brought up time and again, a new feature in the sub-segment is the five million sq ft of small offices, home offices (SoHos) entering the market. He said Greater Kuala Lumpur would see office space totalling 100 million sq ft this year with total supply at 95.5 million sq ft as at the second quarter.

This figure excludes office blocks with less than 100,000 sq ft and those less than 10 storeys high. It also excludes Putrajaya and Cyberjaya. A total of 23 million sq ft will be entering the market by 2017, of which a quarter of them will be in the city centre. National Property Information Centre latest figures have it at more than 111 million sq ft.

Boyd said the SoHo market came in different names SoFos (small offices, flexible offices) and SoVos (small offices, versatile offices) and can be used as either offices or residentials.

“They will compete with the upper floors of shop houses which are becoming dinosaurs,” Boyd said.

In the retail scene, Boyd said Malaysia has 50 million sq ft of retail space, which was ahead of Singapore and 18 malls with 10 million sq ft entering the market.

“Second and third generation malls are struggling,” he said, adding that Malaysia had three of the largest malls in the world and 70% of the world’s top brands.

“Our attraction is the number and the variety,” he said, adding that retailers find it “easier to come here” as they need only to negotiate with five major landlords compared with “hundreds” if they aspire to enter London’s High Street market.