Rush to sell off properties in Ipoh

REAL estate agents in Ipoh are worried that several measures announced during Budget 2014, such as the Real Property Gains Tax (RPGT) hike, will dampen the already soft Ipoh property market.

PWP Properties (N) Sdn Bhd business development director Stephanie Chang said the announcement of the increase in RPGT, ranging from 30% to 15% of profits for properties sold within five years, had caused a scramble among several of her clients to sell off their properties before the new rates are imposed on Jan 1, 2014.

“The day after Budget 2014 was tabled, we started receiving calls from clients urging us to speed up sales of their properties.

“Some are even willing to sell their property at lower prices, but the process is not as simple as one thinks.

“You need a willing buyer and if the property is leasehold, you need to get the Mentri Besar’s consent and go through a lot of paperwork that will take at least a month to be finalised.

“By the time the sale can go through, it will already be next year and subject to the increased RPGT rate,” she said.

Chang said she foresees a drop in the number of second-hand property next year, while investors get accustomed to the new rates but said the extent of the impact on business will only be known when the time comes.

“Having been in the business of selling second-hand property for several years now, I have watched how the industry was affected by the announcement of the RPGT a few years ago and its gradual increments.

“However, the hike is quite drastic this time around but I cannot make an assumption on how big an impact it will make.

“The market will be more challenging when Budget 2014 measures take effect, but in spite of that, there is always business to be made in property and real estate,” she said.

Another policy changed during the Budget 2014 tabling that Chang expects to affect the property market is the increase in the minimum price of property that can be purchased by foreigners, from RM500,000 to RM1mil.

“Quite a number of Singaporeans and Chinese nationals contacted us after Budget 2014 announcement in the hope of buying Ipoh property before the RM1mil minimum price is implemented.

“Personally, I am a bit apprehensive about the increase because while the minimum price makes sense in areas such as Kuala Lumpur and Penang, with sky-high property prices, there are barely any properties for sale in Ipoh that reach RM1mil.

“I feel it would be better if the policy was amended to suit the market in each state,” she said.

As for Raine and Horne International Zaki and Partners Ipoh resident valuer James Chou, he feels that Budget 2014 policies will further soften the already slow property market in Ipoh.

“Just take a look around the city and you will see quite a number of shops lying empty, as the economy in Ipoh is not as strong as in Kuala Lumpur or Penang.

“With that in mind, I feel the RPGT hike is a little too drastic and not fair to smaller economies such as in Ipoh.

“There is practically no need to curb speculation in Ipoh since the market is already slowing down,” he said.

Instead, Chou felt that the Government should look into revising housing loan rates if it wanted to make property prices more realistic.

“The difference between maximum loan rates for first property purchases and subsequent purchases should be widened if the Government’s aim is to reduce speculation.

“On the whole, I believe the property market should be left to operate with as few government regulations as possible.

“While some regulations are needed, those announced in Budget 2014 are quite drastic,” he said.

D. Henry Valuers Realtor director D. Henrey Arther concurred that the second-hand property market in Ipoh has been quite slow this year, with the number of sales at his agency taking a 50% dip compared to last year.

“During the first half of the year, potential buyers were waiting for the general election to see if there would be any changes in the political landscape that would affect the property market.

“After that, they waited for the tabling of Budget 2014 before making any purchase decisions,” he said.
However, Arther said the recurring problem affecting property sales under his watch were not directly related to any policies amended in Budget 2014 and had to do with bank loans instead.

“Ever since Bank Negara tightened its regulations for housing loans early this year, banks have followed suit and this has resulted in quite a high rejection rate for such loans.

“While they were more accommodating with paperwork and the applicant’s financial history before this, I have faced many cases this year where the purchaser is more than capable of servicing their property loans, but a slight blemish in their financial records or income tax statement causes problems in their loan applications.

“Now, the simplest mistake such as neglecting to pay a RM100 instalment a decade ago can result in a housing loan being rejected.

“This has affected first-time property purchasers such as young families significantly.

“They neither have experience in dealing with stringent regulations for bank loans nor the cash to buy property without taking loans,” he said.

Arther said that if the Government wanted to help first-time property purchasers through its Budget
2014 policies, it should also look into providing financial consultation and education to such purchasers.

“None of these people are cash-rich and they need to go to financial institutions to be able to buy their first houses.

“The problem is quite distressing in Ipoh, as property prices are low compared to bigger cities, yet locals cannot buy homes due to red tape and paperwork problems.

“If the Government is serious in ensuring that everyone is able to own a home, they should guide the people through the complicated process of obtaining property loans,” he said. - The Star