FREE MALAYSIA TODAY. 9TH AUGUST:
Contrary to popular belief, the Malaysian property sector has been surprisingly resilient despite the economic impacts of the Covid-19 pandemic. This is largely due to the fact that having a roof over one’s head is not a want, but a basic necessity.
Other than that, there are also a number of bargain hunters and investors out there looking for a good deal. This explains why the overhang of residential units decreased in volume in 2020, down by 3.6% compared to 2019, based on NAPIC’S Property Report 2020.
That said, with Covid-19 cases still surging and ensuing lockdowns prolonging, is it a good time for you to purchase a home?
The government is playing its role in keeping the property market alive by further extending the Home Ownership Campaign (HOC). Originally introduced in 2019, it was first extended in June 2020 under the PENJANA initiative and was supposed to end on May 31 2021.
However, it was once again extended until the end of the year under the Pemerkasa Plus announcement. Under the HOC, homebuyers are entitled a minimum 10% discount on the purchasing prices of selected projects listed under the scheme.
What’s more, homebuyers will also enjoy exemptions not only on stamp duty, but also on instruments of transfer, all of which can lead to savings in the five digit territory. However, the HOC is not the only government incentive aimed at boosting homeownership.
Under Budget 2021, first time homebuyers (FHB) will enjoy full stamp exemption until 2025, which means that subsale properties are also included, unlike the HOC which only caters for new projects. Additionally, Bank Negara Malaysia’s Overnight Policy Rate (OPR) remains at an all-time low of 1.75%.
Simply put, the lower OPR triggers local banks to reduce their base lending rate (BLR) and base financing rate (BFR). Consumers can then enjoy lower interest rates and in turn, lower monthly instalments. Some banks are even offering home loans for as low as 2.9%.
This is a huge contrast to the average house loan interest rate of 3.8% that was recently calculated based on the loans offered by 23 banks (based from Ringgitplus on 16th July 2021).
Coupled with the fact that some developers are lowering their purchase prices in order to lessen their inventory, this would be a good time for FHB or upgraders to finally purchase their dream home.
However, some developers may include attractive rebates and freebies that sound too good to be true – so it is always a wise idea to check the actual value of the property to ensure that the prices have not been marked up.
A good place to check this is at the Property Advisor portal, where you can find actual transactions of similar properties in the area.
PropertyGuru’s Malaysia Property Market Index for Q2 2021 revealed that overall median asking prices have dropped by 0.84% quarter on quarter, a result of the recent economic uncertainty.
Local research house, Kenanga, also reported that although housing prices have soared internationally in the past year, Malaysia’s housing market is not expected to follow suit due to the slower recovery from Covid-19 and existing oversupply of houses.
In a buyer’s market, the negotiation power lies with the buyer, whereby it is possible to purchase a house below market rate.
In tandem with lower monthly commitments – a benefit of a lower interest rate, a buyer can not only save money by purchasing now, but also enjoy a higher capital gain in the long run.
This means that for those with a healthy debt service ratio and stable finances, it is actually the most ideal time to begin house hunting, especially with the high possibility of getting lower interest rates.
Before beginning the house hunting though, find out which bank gives you the best interest rates that will increase your savings. You can also consult the bank regarding your monthly instalments to ensure that you can afford to keep up with the home loan instalments.