KUALA LUMPUR: Analysts expect the possible upward revision of Real Property Gain Tax (RPGT) would impact the property market in the short term but in the long run, it could curb property speculation.
However, some parties see the changes in the RPGT rate would affect the investors' perception on Malaysia's property sector policy.
“RPGT is structurally targeting speculators and not investors who buy properties for renting purposes,” said an analyst with MIDF Research who tracks local property counters.
“The increase in RPGT also discourages the property buyers to speculate,” he added.
On August 27, Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan had said that the government is considering increasing the RPGT to curb speculation and stabilise houses prices in the country.
Should the tightening measure takes place, analysts expect some insubstantial slowdown in the property market over the short term and it would weigh down sentiments on property counters.
The sentiment-driven equity market pared down gain with the possibility of RPGT hike. Bursa Malaysia Property Index, the benchmark index which gauges 86 property counters, lost about 76 points in just two days.
“We believe there will be a slowdown in property market, more or less. However, we are not sure on the quantum of impact, and we do not make any projection on that,” an analyst said.
The MIDF research analyst suggests that the RPGT revision is carried out in gradual and moderate phase.
“A sudden hike of 10 per cent will definitely drop a bombshell in market,” he said.
Meanwhile, Interpacific Securities equity research head Pong Teng Siew explains that changes in overnight policy rate (OPR) could have a greater impact on the property market.
“We do not see RPGT causing market demand to slump, plus interest rate is relatively stable now, so market demand should continue to be healthy,” he said.
In Budget 2013, the government revised the RPGT to 15 per cent from 10 per cent for properties sold within two years, and for properties sold between two and five years, the rate was revised to 10 per cent from 5 per cent.
There is also strong probability for the government to revise the property tax rate upwards in the upcoming Budget 2014, which will be tabled at the Parliament on October 25, said Pong.
“The RPGT could serve two purposes. It is also the possible ways for the government to raise revenue and curtail property prices,” he pointed out.
Pong proposes that the government extend the tenure of RPGT tax bracket further, as part of the efforts to chill speculating activities and stabilise property prices.
While home buyers might applaud government’s initiative to further increase RPGT so that house prices will not spiral up further due to speculation, some trade associations are concerned with the possible hike.
The Real Estate and Housing Developers' Association (REHDA) and the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCIM) are of the opinion that there have been too frequent revisions on RPGT.
“There have been several changes to the RPGT and too frequent changes is sending a “flip-flop” message to the investing public, especially foreign investors,” said ACCIM in a press statement recently.
REHDA,representing property developers in Malaysia, had said that the government needs to study the matter carefully and implement a holistic approach to restrain property speculation.
"There are better mechanisms to curb speculation than just applying RPGT universally, throughout the country," its president, Datuk Seri KC Yam said.