Higher likelihood of more cooling measures
● Malaysia's housing minister Abdul Rahman Dahlan has expressed the possibility of implementing more cooling measures on the property market with potential use of tools such as an increase in RPGT, DIBS restriction and lower LTV.
● We believe the last few measures such as the 5 pp hike in RPGT during the 2013 budget and the cap on housing loans tenures were moderate. But the use of more measures collectively could be more significant.
● Under the current RPGT, gains on the sale of property are taxed at 15% if sold within two years of purchase. If RPGT were increased to pre-global financial crisis rates (GFC) of 30% (within two years), this could be significantly negative for the sector.
● It is looking likely that the government may implement further property measures but it is comforting that Abdul Rahman is wary that too much intervention could 'cramp' growth and a slump in the housing sector would have a widespread impact on the overall economy. As long as the economy remains robust, select property projects will sell. Maintain OUTPERFORM on IJML and UEMS.
Potential for more cooling measures
Malaysia's housing minister Abdul Rahman Dahlan has expressed the possibility of implementing more cooling measures on the property market. The possible tools the government could use are raising real property gains tax (RPGT), lower loan-to-value (LTV) ratios for second and subsequent house purchases, and restrictions on developer interest bearing schemes (DIBS).
According to the National Property Information Centre, house prices in Malaysia have outpaced median household income growth by 1-4% across the four main property markets since 2009. As such, affordability has deteriorated in recent years. The government's view of affordable housing are those priced below RM400,000.
Recent measures have been moderate
We believe the last few measures such as the 5 pp hike in RPGT during the 2013 budget and the cap on housing loans to 35 years have been moderate. Additionally, talks on the restriction of DIBS, depending on the severity, could be circumvented by developers through the use of other promotional tools. Although the implementation of more measures could collectively be more significant, curbing speculation would be healthy for the market in the long run.
RPGT at 30%?
The government has raised the RPGT by 5 pp consecutively over the last two budgets. However, the impact on property prices has been minimal. There does appear to be a significant slowdown in house prices for 1Q13 (+6% YoY and -3% QoQ), although the figure is preliminary and has had the tendency of being revised up during recent quarters.
The Housing Minister A. Rahman was quoted as saying under the current RPGT "If you dispose of the house within two years, you will be taxed 15% of the profit. There’s no stopping us from increasing it to 30%."
We believe that reverting to pre-GFC RPGT rates which included 30% tax on gains for disposals within two years would have a significant negative impact on the sector.
Government is wary that intervention will "cramp" growth
It is looking likely that the government may implement further property measures but it is comforting that they are wary that too much intervention could "cramp" growth and a slump in the housing sector would have a widespread impact on the overall economy.
With the government's push to curb property price growth and increase housing below RM400,000, (with bodies such as PR1MA targeting 80,000 affordable houses this year) property price growth is likely to slow. Our view is that as long as the economy remains robust, select property projects will continue to sell. We remain positive on IJM Land and UEM Land.
Source/Extract/Excerpts/来源/转贴/摘录: Credit Suisse
Publish date: 02/08/13