Prospective home buyers may postpone big-ticket purchases for the next six months due to rising interest rates, as well as ongoing market headwinds such as rising inflationary pressure and ringgit weakness, according to analysts.

RHB Investment Bank Bhd (RHB IB) says the stamp duty exemption for first-time home buyers will have little impact on the overall property market.

“We maintain our ‘neutral’ sector call,” it said in a note today.The government recently announced a stamp duty exemption on instruments of transfer and loan agreements for the purchase of a first home. Stamp duty will be waived 50 per cent for homes priced between RM500,000 and RM1 million, and 100 per cent for properties priced RM500,000 and below.

The exemption will apply for sales and purchase agreements that are completed from June 1, 2022, to Dec 31, 2023.

Although the demand-driven incentive has been reinstated, RHB IB said that cost pressure remains a major concern for developers, as building material prices remain high and labour shortage issues have yet to be resolved.

As a result, it anticipates a potential downturn in developer earnings in the coming quarters.

RHB IB said that developers such as Mah Sing Group Bhd, LBS Bina Group Bhd, Matrix Concepts Holdings Bhd, and Tambun Indah Land Bhd will benefit from the incentive because they have high exposure (more than 60 per cent) to properties selling for less than RM500,000.

It said that the potential benefits to the larger players may be minimal because mid-range products make up a smaller percentage of their overall portfolio.

CGS-CIMB has a neutral rating on the property as well.

It said that the impact of the stamp duty exemption could be limited due to macroeconomic headwinds and less lucrative incentives than the Home Ownership Campaign (HOC).

“There is no minimum 10 per cent discount for residential properties under HOPE, unlike the HOC in 2019 and 2020/2021. The i-MILIKI incentives apply to first-time house buyers only, whereas the HOC had a wider coverage,” it said.

The research firm also believes that macroeconomic headwinds such as rising interest rates and inflation could dampen purchasing sentiment.

Despite incentives, it remains uncertain whether people will purchase big-ticket items during difficult times, as property prices have more than doubled since 2009, it said.

Meanwhile, Hong Leong Investment Bank (HLIB) Research anticipates that the initiative will boost home buying in the ailing property market, though it notes that the incentive is less appealing than what was provided during the HOC from 2019 to 2021.

“However, due to the general risk-off sentiment in the market, and as investors continue to juggle property market developments, investors are likely to remain on the sidelines while awaiting more clarity and signs of sector improvement,” it said in a note.

Source, New Straits Times, 18 July 2022

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