The property sector in Malaysia is set to weather the impact of a flat 4% stamp duty on memorandum of transfer (MOT) for non-citizens and foreign-owned companies in property transactions, thanks to several factors, according to MIDF Research.
The research house has maintained its positive stance on the sector, citing expectations of a stable benchmark overnight policy rate for the year as a driver for property demand recovery.
Additionally, Malaysia’s property overhang situation is improving, which bodes well for the sector’s near-term prospects.
MIDF Research’s top picks in the sector include Mah Sing Group Bhd (Buy, TP: RM1.01) and Matrix Concepts Holdings Bhd (Buy, TP: RM1.86). The firm is particularly optimistic about property developers focusing on the mid-market and affordable segments, given the resilient demand for affordable homes.
Regarding the Madani Budget 2024, MIDF Research anticipates marginal benefits for the property sector due to the loosening of requirements for the Malaysia My Second Home (MM2H) program, potentially attracting more foreign buyers.
Furthermore, the allocation of RM10 billion to extend the Skim Jaminan Kredit Perumahan (SJKP), aimed at assisting those without regular income in purchasing homes, is expected to boost demand for real estate in the Klang Valley and Penang.
However, the 4% flat-rate stamp duty on MOT for non-citizens and foreign-owned firms could deter some foreign buyers.
In summary, MIDF Research believes that the property sector will experience a net positive outcome from Budget 2024, with the advantages of MM2H easing and new infrastructure projects outweighing the minor drawback of the stamp duty on MOT for foreigners.
Bank Negara Malaysia has reported growth in property loan demand, with applications increasing in August 2023, reaching RM54.4 billion, a 4.9% month-on-month (m-o-m) increase. Year-on-year, loan applications increased by 2%, indicating a modest improvement in property buying interest.
The approval rate for property loans also saw an improvement in August 2023, rising to RM24.8 billion, a 7% m-o-m increase, boosted by a higher ratio of approved loan to applied loan. This year-on-year increase reached a cumulative total of RM178.7 billion, up by 7.8% in 8M2023.
With these positive indicators, the Malaysian property sector appears well-positioned to thrive despite the stamp duty adjustment.