Amid cooling measures, grim outlook for property market: KUALA LUMPUR, Sept 10 — In another hit to the property market, Maybank Investment Bank (IB) Research has downgraded its outlook for the sector yesterday amid uncertainties posed by Putrajaya’s cooling measures. The research house is also predicting another round of policy tightening from the government to rein in household debt, despite the insistence by Bank Negara Malaysia (BNM) that its measures initiated in July has started to work. “We expect interest on property stocks to remain lacklustre in the short term in the absence of sector catalysts and amid policy overhang issues,” said a Maybank IB daily report here. “Sentiment towards developers should stay weak in the run-up to Budget 2014 in October 2013 and may only improve after more clarity on government policy and mega projects post Budget.” Maybank IB has downgraded the property sector from “overweight” to “neutral”, signalling a loss of confidence that the sector will outperform others. Last week, Prime Minister Datuk Seri Najib Razak had announced that Putrajaya will now be reviewing public projects more carefully, giving higher priority to projects with low-import content and high-multiplier effects. However, certain projects such as the Mass Rapid Transit (MRT) will continue as planned, while the Kuala Lumpur-Singapore high-speed rail project is still being negotiated. The decision was part of Putrajaya’s move to consolidate its fiscal position, and reduce the federal government current account deficit-to-gross domestic product (GDP) ratio to 3 per cent by 2015. Maybank IB warned of further measures to cool down the property market amid concerns of a bubble, including the real property gains tax (RPGT) that is most likely will be introduced in Budget 2013, and a hike in stamp duties. “At this juncture, we expect “soft- landing” cooling measures, for the priority would be keeping a lid on speculation while promoting home ownership, we believe,” it said. Last month, the Ministry of Urban Well-being, Housing and Local Government suggested that it is studying the possibility of increasing the RPGT to stabilise the prices of houses in the country. Minister Datuk Abdul Rahman Dahlan said the current low RPGT has not been effective in stabilising house prices and it may need to be increased to curb unhealthy speculation in the housing market. In response, the Real Estate and Housing Developers’ Association Malaysia (REHDA) predicted uncertainty among foreign investors, leading to a wait-and-see attitude. “The curbing of speculative buying should be approached with care and sensitivity. There are better mechanisms to curb speculation than just imposing higher RPGT throughout the country,” REHDA president Datuk Seri Michael Yam told reporters recently. “I’m sure the 4 million people who own houses now don’t want to see a drop in the value of their properties.” Predicting a 5 percentage points increase in RPGT for properties disposed within the first five years, Maybank IB expected a fall in speculative activities over the near term but not a longer one. Minister Abdul Rahman had also previously questioned the effectiveness of the RPGT to curb housing speculation, despite a hike from 10 per cent in 2011 to 15 per cent in 2012 for property sold within two years. The House Price Index by National Property Information Centre showed that in 2011 and 2012 the house price index recorded the highest increase for the last five years especially in Selangor, Kuala Lumpur, Penang, Pahang, Sabah, Perak and Terengganu. Maybank IB also pointed out that Malaysia’s household debt-to-GDP ratio has increased steadily up to 83 per cent in March this year, and is going up at a faster pace than nominal GDP at between 10 and 11 per cent compared to between 7 and 8 per cent. “There is, as such, reason to be wary of further credit measures to moderate the expansion in residential property loan demand, if household debt growth is to be controlled,” it added. In addition, Maybank IB predicted that major development projects such as Tun Razak Exchange and Bandar Malaysia could be delayed from deferment or rescheduling, leading to a drop in catalysts for the property sector. Maybank IB called for a “hold” rating on stocks for property developers Sunway Group and SP Setia Bhd, but maintained its “buy” rating for Glomac Bhd, Mah Sing Group, and UEM Bhd. dlvr.it/3xLPnL
Posted on: Tue, 10 Sep 2013 04:07:05 +0000
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