The increase in the real property gains tax (RPGT) in Budget 2014 will not dampen the property market but prevent over-speculation, says property consultant Rahim & Co.
Its executive chairman, Datuk Abdul Rahim Rahman, said the prices of residential properties, especially in urban areas such as Kuala Lumpur, will still grow but at a slower pace.
"Although the increase in RPGT is a key measure to curb speculation, we think the overall intention would be better served with an additional measure, which is imposing additional stamp duty for purchases of third property and above," he said.
In the Budget 2014 announcement, property disposed of within the first three years the RPGT will be 30 per cent.
This is an increase from 15% for property disposed of within the first two years under Budget 2013 and 10 per cent for property disposed of between the third and fifth year.
Abdul Rahim said higher RPGT will have a knee-jerk effect on residential property activity for 2014 with some slowdown seen, although the effect may plateau off.
"For this year, the prices of residential properties in Kuala Lumpur may rise by at least 10% due to demand from the population," he said.
As at first half of 2013, Abdul Rahim said, the total volume of property market transactions was on a downtrend, brought down by slackening sales of luxurious condominiums in the Kuala Lumpur City Centre (KLCC) area.
This, he said, was due to many unsold units as foreigners withdrew their committed purchases with the economic downturn in developed countries.
According to government data, total volume of property transactions in Malaysia was only 185,709, a reduction of 14.4% from first half 2012 figure of 217,067.
Total value of transactions dropped by 2.8% from RM68.999bil in first half 2012 to RM67.063bil in first half 2013.
Abdul Rahim said the number of transactions dropped tremendously for properties priced below RM250,000 mainly in the residential sector due to the shrinking supply of houses priced below RM250,000. - By The Star
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