URGENT amendments to the COVID-19 Act is required so that a sufficient exclusion period can be granted considering the delay encountered in construction works during the lockdown period this year.
Given the inefficiencies and interruptions resulting from the lockdown measures have led to the industry supply chain been disrupted, the industry is hopeful that the amendments can be gazetted as soon as November, according to RHB Research.
‘The sector is still reeling from the effects of the pandemic as the lower-income segment has been badly affected,” opined analyst Loong Kok Wen in a recent real estate sector update. “Hence, certain incentives or stimulus measures are still needed to accelerate the recovery of the industry.”
The research house had earlier hosted a virtual meeting with the Real Estate & Housing Developers Association (REHDA) president Datuk Soam Heng Choon.
To spur the recovery of the property market, REHDA made several proposals to the Government which include the Home Ownership Assistance Programme (HOAP); extension of the current real property gains tax (RPGT) waiver; removal of the loan-to-value (LTV) ratio; and reviewing the threshold for foreigners buying properties.
“While the HOAP is similar to the previous developers’ interest-bearing scheme, REHDA is advocating greater transparency and this scheme should only be available for properties priced below RM500,000,” noted RHB Research.
“At the same time, industry players are also lobbying for the extension of the Home Ownership Campaign (HOC). If some of these proposals are accepted, we think they will help to expedite the recovery in the housing market while boosting affordability for first-time home buyers.”
Generally speaking, the research house observed that developers are turning more optimistic for the outlook in 1H 2022 as the country’s vaccination rate advances further.
“Property sales under the HOC grew by about 10% year-on-year (yoy). Based on our checks with a few developers, while the property sales in 3Q 2021 are expected to be softer quarter-on-quarter (qoq), most companies are on track to hit their sales targets by year-end,” projected RHB Research.
In a related development, the research house also expressed pessimism over a proposal by some consultants for the Government to impose a 2% transactional tax (1% buyer and 1 % seller) as a measure to raise Malaysia’s tax revenue.
“While (REHDA’s) Soam thinks that this would be detrimental to the sector recovery, we also agree that the timing may be inappropriate as many sectors are still trying to recover or survive due to the impact of pandemic,” opined RHB Research. “Hence, policies to discourage buying and selling would be unwelcomed at this point.”
Against the above backdrop, RHB Research has retained its “neutral” rating on the property sector with Matrix Concepts Holdings Bhd as its top pick (“buy”; target price: RM2.36). – Oct 18, 2021
