Excessive speculative buying of properties due to various flexible home loan packages is not Malaysia’s major concern, said several industry players and analysts.
SP Setia Bhd chief executive officer, Tan Sri Liew Kee Sin, said: “Given that many of the buyers were first-time home owners or upgraders, the company was not overly concerned about speculative buying,” referring to its Setia 5/95 home loan package which ended in July last year.
“The group believed that there were still buyers out there who were holding back then due to the excessive negativity caused by the financial meltdown in early 2009,” he added.
Through the 5/95 scheme, buyers pay a 5 percent down-payment and sign the sale and purchase agreement. Loans need to be protected but servicing only begins when the property is ready.
The 10/90 property financing scheme, on the other hand, requires buyers to pay a 10 percent deposit, with the mortgage repayment to start only when the property is completed.
On top of the two schemes, developers also offer deferred mortgage payment packages for a maximum of two years.
There are several concerns that excessive speculative home buying will result in the increase of supply in the market, if home prices start to decline and affect new home sales.
One property analyst said that property speculations are not excessive in Malaysia as of today.
“It is because somehow we do not attract foreign investors that much although our property prices are cheaper than in some other countries in Asia,” the property analyst said, adding that speculative buying is more visible in Hong Kong and Singapore.
The analyst also noted that even when the 5/95 financing scheme was introduced last year, the property index only increased 3 percent in H1 2009.
“Speculative buying in Malaysia depends on the location and market segment. Property investments here are usually slanted towards the high-end segment,” she said.
Thiruselvam Arumugam, the executive director for PPC International Sdn Bhd, said that the 5 percent real property gains tax (RPGT) implemented on January 1 would help to minimize speculative buying of properties.
“The RPGT forms some sort of control for speculative buyers.”
“It promotes a healthy increase in property prices compared with an ‘artificial’ increase due to speculative factors,” he said.