The 2022 budget, which was the focus of the whole Malaysians, was finally released in October. The total cost of the financial budget born under the pandemic reached RM332.1 billion. The people have mixed opinions on this budget, which can be called the largest budget in our history. It is generally believed that although the government has introduced a number of measures to benefit the people and increased funding to combat COVID-19, it does lack long-term economic vision and development direction on the whole. All kinds of short-term aid can’t really improve the country's productivity and competitiveness, nor can it promote the real estate sector.
In Budget 2022, the real focus on stimulating property industry includes:
- The government will allocate RM2 billion to the Syarikat Jaminan Kredit Perumahan Berhad (SJKP) or Housing Credit Guarantee Scheme (HCGC) to help people who do not have proof of stable income but have the ability to repay their mortgages.
- The real property gains tax (RPGT) will not be applied for properties sold after the sixth year.
- The government will allocate RM1.5 billion to build and maintain low-cost housing units in the country and improve the living environment of low-income groups.
Loud thunder, Little rain
Before the announcement of the Budget, many hoped that the government could extend or expand the current home buying policy and financial incentives, hoping to stimulate the property market in the post-pandemic era, so as to promote the country's economic development. However, after the unveiling of the latest Budget, people can't help but lament the lack of comprehensive coverage and vision.
The disappointment places
- Lack of new mega infrastructure projects
With the financial constraints, we cannot see any dominant infrastructure projects in this year's budget. In many cases, these projects are not only the basis for the country’s development, but also support the development of the whole region. For example, TRX project in Kuala Lumpur city center, the Kwasa land development in Sungai Buloh, the MRT project in the Klang Valley and major interstate highways have directly driven regional economic development, especially conducive to the revitalization of the property market.
- House Ownership Campaign (HOC)
Secondly, the Home Ownership Campaign (HOC) was not extended as expected and officially ended in December 2021. We all know that the first difficulty in buying a home is actually the down payment. The HOC has indeed helped home buyers relieve a little financial pressure, and it has indeed stimulated the purchase of property. According to a market survey conducted by a local real estate consulting website, more than half of the locals hope that this campaign will be extended to the second-hand housing market and commercial units. However, it is really disappointing that this campaign still cannot be continued in the end.
- Stricter MM2H conditions
The government significantly adjusted the application conditions for the Malaysia Second Home Program (MM2H) in August. The stricter conditions have stirred heated discussions online and among those in the industry. Many have commented that the requirements are stringent and the government may not achieve its goal. Although the second home plan in Malaysia does not account for a small proportion of the overall homebuyers, it is an important part of the promotion of real estate (especially high-priced properties). The excessively high threshold will undoubtedly shut out foreigners who have planned to settle in the country, not only impacting local high-priced real estate, but also affecting economic development in the long run and greatly reducing my country's competitiveness on the international stage. The Budget also did not make any adjustments or statements regarding this aspect.
3 main property sector initiatives for Keluarga Malaysia
- RM2 billion Home Loan Guarantee Scheme (Skim Jaminan Kredit Perumahan)
This can benefit potential non-fixed income earners such as gig workers, small entrepreneurs and people. This group of people is indeed able to repay the loan, but the lack of regular income proof is holding them back from applying for a mortgage. This RM2 billion guarantee will allow more people to realize their dream of buying a house.
- The abolishment of Real Property Gain Tax (RPGT)
New real estate and second-hand housing are inextricably linked. As an investor, the real estate successfully sold is undoubtedly a booster for them to continue investing in real estate. During the pandemic, many people will also choose to sell their properties to reduce their financial burden. The Government will no longer impose Real Property Gains Tax (RPGT) from the disposal of real property by residents, permanent residents (PR), and other than companies starting from the sixth year onwards. This measure will help invigorate our property market to make it more resilient and eventually translate into a positive multiplier effect on the economy.
- Housing projects for the low-income group
The Government recognises that every member of Keluarga Malaysia has the right to own a home as a necessity of life. Towards that end, the Government will continue housing projects specifically for low-income groups, with an allocation of RM1.5 billion. This particular move in Budget 2022 will indirectly help ease the burden of potential house buyers, especially those who belong in the B40 category.