Malaysia’s property outlook: Mild surprise, muted Budget 2023 impact

WHILE it is pleasantly surprised by the property measures announced during Budget 2023, Maybank IB Research expects muted impact on property sales as compared to the previous Home Ownership Campaigns in 2019 and June 2020-2021 in view of the current high interest rate environment which could take a toll on house buyers’ affordability.

For the record, there has been a 75 basis points (bps) hike in Bank Negara Malaysia’s (BNM) overnight policy rate (OPR) to 2.5% from the 2019-2021 level of 1.75% which was a historical low.

“In our view, further interest rate hikes (4Q 2022E: +25bps, 2023E: +25bps) and political uncertainties ahead of the GE15 (15th General Election) which usually affect the purchase of big ticket items remain as key risks to the sector,” envisages analyst Wong Wei Sum in a property sector update.

Key property measures from Budget 2023 are:

  • Stamp duty exemption for properties priced between RM500,000/unit to RM1 mil/unit will be increased to 75% (from 50% exemption) until 31 Dec 2023. The 100% stamp duty exemption for properties priced at RM500,000/unit and below (until Dec 2025) is unchanged, and
  • Stamp duty for the transfer of property between family members will be RM10 (from 100% exemption between husband and wife, and 50% between other family members).

“Budget 2023 measures positively surprised us as we did not expect further reduction in stamp duty (by -25 percentage point) for properties priced from RM500,000-RM1 mil/unit after the launch of the Keluarga Malaysia Home Ownership Initiative (i-MILIKI) in mid-July 2022,” opined Maybank IB Research.

“i-MILIKI offers a 100% stamp duty exemption for first-time homeowners for properties priced at RM500,000/unit and below and 50% exemption for properties priced between RM500,000/unit to RM1 mil/unit.”

All-in-all, the research house expects Budget 2023 to have a mild impact on the overall local property market although it would help to relieve some of the developers’ operating costs such as the need for them to absorb stamp duties of their buyers depending on project scalability.

“No change to our earnings forecasts and stock ratings. In a rising interest rate environment, we prefer lowly-geared township developers with exposure in both the landed residential and industrial property segments,” noted Maybank IB Research.

“Our ‘buy’ picks for the sector are Eco World Development Group Bhd (net gearing: 0.35 times) and Sime Darby Property Bhd (0.3 times).” – Oct 10, 2022


Main photo credit: Asia Property 

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