A recap on Budget 2023’s impact on the property industry
By Joseph Wong
The recent tabling of Budget 2023 did not inject direct allocation towards the real estate market but the existing initiatives remain intact. This will somewhat stabilise the industry as a result of the fiscal adjustments because the existing tendencies will not be considerably altered.
As a result, market sentiments are showing an anticipated improvement in both prices and unsold inventory. StarProperty’s predictions for the property sector are similar to Asia's global real estate technology group Juwai IQI’s.
"Our 2023 prediction remains the same. This year, transaction activity will rise by up to 3%, which will help the home market. Since both domestic and foreign consumers visit the exhibition suites again, developers with appealing new projects will successfully introduce them in this market,” said Juwai IQI co-founder and group chief executive officer Kashif Ansari.
Although Stamp Duty is a significant source of income, the government has concluded that extending the full stamp duty exemption for residences up to RM500,000 until the end of 2025 will be better for the economy. The Stamp Duty exemption rate will be enhanced to 75% for homes up to RM1mil in value. The stamp duty exemption is crucial because these fees lower consumers' purchasing power and deter them from downsizing or upgrading. This prevents younger people from purchasing larger homes to suit their expanding families and confines older couples in houses that are too big for them. Whether purchasing or selling a home, the Stamp Duty exemption will ease the process.
The allocation to help gig economy workers obtain mortgages has been increased to 20,000 borrowers and RM5bil. Without this assistance, the growing numbers of gig workers will be shut out of the housing market, making this a crucial step. That would prevent them from acquiring homes, which is the safest and most effective way to generate wealth and security.
“There are more than four million gig workers in Malaysia, and these individuals usually have no fixed income. That makes it hard for them to obtain a traditional mortgage from a bank to buy a home. The housing credit guarantee for gig workers will help as many as 20,000 Malaysians buy their own home and take a giant leap forward in creating financial security for their families,” added Ansari.
For the transfer of property by the use of love and affection, the government has instituted a new threshold to help less wealthy Malaysians without placing an excessive burden on the wealthier group.
For properties valued at less than RM1mil, there would be no stamp duty while for properties valued at more than RM1mil, the stamp tax would be 50%.
With the aid of this exemption, Malaysians can assist a spouse or child to improve their housing situation. It can reduce the number of vacant properties in the country and stimulate new development.
The amended Budget includes several programmes that together will spend over RM2.2bil on enhancing the calibre of the nation's current housing stock, either via rehabilitation and repair or through new construction. The government's measures to upgrade the housing stock are a positive move. The different efforts include creating and renovating housing for active-duty military personnel, fixing lifts in low-cost strata dwellings, and renovating and building homes in rural locations. Also, there are fresh funds for the Rumah Mesra Rakyat Program, the People's Housing Program (PPR), and Malaysian Public Housing Projects.
These budgetary measures alone would result in the construction of more than 35,000 new houses for lower-income Malaysians and 7,000 for the armed forces, agreed Ansari.