Press Release – Budget 2024 Spurs Malaysian property Industry Affordability – Insights by Juwai IQI
Kuala Lumpur (13 October 2023) — The real estate industry welcomed the Malaysia MADANI 2024 Budget tabled by the government on Friday, according to comments released by Juwai IQI Co-Founder and Group CEO Kashif Ansari.
“The Budget 2024 focuses on improving the economy and standard of living. It contains measures that will help Malaysians to afford their own homes. This will be vital to helping more ordinary Malaysians achieve financial security and to lay the foundation for future economic growth,” Mr Ansari said. “The real estate industry welcomes these initiatives.”
“The Budget’s housing provisions are targeted just as we hoped. We wanted to see measures that made home ownership more affordable because owning your own home is a key to financial security for regular Malaysians.
“The provisions that Budget 2024 makes specifically for housing includes RM 2.47 billion for the construction of people’s housing projects, 4% flat rate stamp duty on Memorandum of Transfer (MOT) by non-citizens and foreign-owned companies (with the exception of permanent residents) is set to foster a more equitable housing landscape, RM23.37 billion to restore sick projects encompassing some 28,000 residences, RM 2.47 billion for public housing projects, RM1 billion to revitalise identified abandoned projects, RM 10 billion for the Skim Jaminan Kredit Perumahan, plus more than RM1 billion more to sustain PPRs, construct affordable housing, maintain housing and improve housing infrastructure, repair property for underprivileged rural individuals.
“In 2024, the reform of the real estate transfer stamp duty will institute a simplified structure, establishing a flat rate of RM 10 for transactions where beneficiaries surrender their entitlements to eligible heirs under a will, Faraid, or the Distribution Act 1958. This new system marks a departure from the intricate previous framework, eliminating the reliance on property valuation for determining stamp duty costs. Simple measures like the stamp duty reform may not have a big impact on the market but they make transactions less stressful and complicated, which is good for everyone.
“New infrastructure always has a significant impact on property values because it enables new economic activities to thrive in locations they couldn’t have before. The Budget 2024 promises to fund several projects that will have long-term positive impacts on property prices. These include the RTS Link with Singapore, which our analysis shows may increase the number of cross-border residents in Johor by 50,000 by 2030.
“Other projects that will drive up property prices and change usage patterns are the Central Spine Road and Pan Borneo Sabah and Sarawak highways.
“If next year’s economy does grow by 4% to 5%, that will provide strong support to family incomes, enabling housing security, and financial independence. Household income and employment are both key indicators for the property market. When people have stable jobs and money in the bank, they are more likely to purchase a home. So, it is good news that unemployment in 2024 should be a relatively low 3.4%.
“The Budget 2024’s emphasis on an investment tax allowance and support for the digital economy will yield valuable benefits. The Budget proposes RM 900 million in financing to enable SMEs to digitise and automate and another RM 100 million to support digitalisation efforts. With the use of technology, small businesses can grow into much larger ones by serving customers in far flung locations and accessing new markets.
“As a fast-growing property technology company with operations in 20 countries, we know that Malaysia has the potential to become a digital superpower. These policies will help make that happen.
“The RM 2 billion that the Budget 2024 allocates towards the energy transition will have an even wider economic impact than the headline number suggests. Many foreign manufacturers, logistics companies and data centre operators are seeking markets where they can find high quality employees, affordable land, and green energy.
“The faster Malaysia makes the transition to green energy, the faster the economy will grow.
“In their lifetimes, most people will probably never buy anything that costs more than their home, so that purchase will always stretch the family finances. That’s why government support to help middle income and lower income families manage the purchase is so important.
“The average home in the country costs about RM 439,000, which is more than five times the average salary of RM 79,000. Almost anyone who has been able to purchase a home has seen their personal financial situation improve as the value of that home increased and as they paid down their mortgage, if they had one.
“Homeownership is part of the formula that has been improving income equality in the country. In this century, prior to Covid, the share of income going to the wealthiest Malaysians decreased, while the share going to the poorest increased — in both cases by about 20%. When you look at Bumis, in particular, their share of income has more than doubled.
“The Budget 2024 includes several measures to make it easier for investors and tourists to visit Malaysia and spend money here. The government will make Malaysia My Second Home (MM2H) more attractive, make it easier for employers to hire highly skilled foreign staff, and introduce easier visa options for students, tourists, and investors. “The visa measures in the Budget should indirectly increase demand in the housing market, with the changes to MM2H likely to be the most significant. Expect more demand from foreign buyers for high-end homes and more demand from investors hoping to operate short-term stay rentals.
“I’ve learned to never bet against Malaysia. Whatever the short-term challenges, the economy always comes out ahead in the long-term. Because in the short term, we humans tend to focus on the risks that things may go wrong, it’s easy to overlook how much the situation has improved over the past few decades.
“One indicator of the improvement in the economic situation is the increase in the homeownership rate to about 77% in 2019. That means nearly four out of every five people own their own homes on average. Decades of proactive government policy has insured a supply of affordable homes and made it easier for low- and middle-income families to buy.
“Another sign of progress is the rapid growth in the average monthly salary, which nearly tripled from RM1,800 in 2010 to around RM 3,000 today. Malaysia is one of the strongest economies in South-East Asia and has a bright future.
— end of press release —
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