CIMB Research says Eco World is its top pick as it offers the highest share price upside among the developers in its coverage.

As reported in The Star Online, CIMB Equities Research is retaining its Overweight call on property sector with Eco World as its top pick.

It said developers with sizeable exposure to mass market housing projects (LBS Bina Bhd, Mah Sing Group Bhd and UOA Development) could benefit if the Budget 2017 introduces measures that help first-time homebuyers.

CIMB Research said the government is reportedly looking into a potential scheme to assist first-time homebuyers to secure loans in Budget 2017. Property developers have also put forth proposals to help first-time homebuyers.

To recap, early this month, the media reported that the government would announce a scheme to help first-time home buyers secure mortgage financing in Budget 2017.

Since then, property developers have proposed many measures, ranging from higher loan-to-value ratios (LTV) and higher debt-service ratios to the reinstatement of the developer’s interest-bearing scheme (DIBS) and a higher cap on the withdrawal of EPF savings for home purchases, for inclusion in the government budget that will be tabled on Oct 21.

In 2015, 89,071 members withdrew their EPF savings to finance purchases of their first homes. The average withdrawal amount was RM23,676. Assuming that this equates to 30% of the average savings of EPF members, raising the cap to 80% could raise the withdrawal amount by RM39,460 to RM63,136. The additional withdrawal is equivalent to 13% of the average transaction price of residential property in 2015.

It said, while the depletion of EPF savings could be detrimental to retirement life, we believe the associated risks of lower EPF savings could be mitigated through several safeguards, such as restricting the high withdrawal cap to those who are young and who therefore have many years of remaining working life (i.e. aged 35 or below), requiring the homes purchased with EPF savings to be owner-occupied and imposing a maximum debt-service ratio of 60-70% on the borrowers to prevent over-leveraging.

Housing wealth currently forms the largest share of the middle class’s net worth. Lower EPF savings could be more than offset by accumulation of housing wealth in the long run.

Click here in order to read the full article as published in The Star Online.