The possible increase in down payment to 20 percent from the current 10 percent for third and succeeding home purchases in Malaysia has drawn mixed reactions from various professionals.
Datuk Michael Yam, president of Real Estate and Housing Developers’ Association (Rehda), said the capping of home loans to 80 percent for the third and succeeding purchases would not discourage wealthy individuals from speculating because they can afford the 20 percent down payment.
“Investors would pull back on purchases after the third unit because of the higher deposit requirement. The impact of this is probably 10 percent – 20 percent of the upmarket segment. Overall, the effect of the cap is minimal as the presence of speculators is small,” said Mr. Yam.
Malaysian Prime Minister Najib Tun Razak said that Bank Negara is likely to implement a limit on financing for succeeding home purchases after the second home, while first-timers can borrow up to 90 percent.
Malaysia’s property market has come under attack in the past year after a double-digit increase in property prices in some locations. Despite growing concerns that a property bubble may arise, Mr. Yam said that “the property market is still lukewarm.” The number of property launches rose compared with the previous year, with many developers offering 10-90 schemes.
Mr. Yam noted that investors may acquire a third home, but nothing more because of the increase in deposit. “Those who buy for the next generation would buy it sooner if they see a capital upside as well.”
“There are usually lower margins for secondary housing,” he added.
He also said that loan capping and other property measures implemented in Singapore had very little effect in property transactions, proving that it was market forces that decided what was best.
Datuk Eddy Chen, managing director at The Metro Kajang Group, said the new move will have little effect on landed homes.
“It is fine to have a pool of properties for rental income. I don’t think there are many people who are buying to flip (to resell when the project is completed). There is always the 5 percent RPGT as a deterrent”, he said.