I am a supporter of DIBS being reinstated for first time home buyers. Readers to kopiandproperty.com would know that. Latest article written was: RPGT is still around, DIBS can come back. However, please allow me to now soften my stand, a little. Perhaps there’s the other side of the coin which I did not really look at closely. In an article in a local newspaper, Datuk Dr Goh Ban Lee (I do not know who is he) gave a few reasons which I do agree. He summarised the current slowdown in the property market as reported by the survey by REHDA and he said that DIBS should not be reinstated even for first time home buyers. He said that the property sector should slow down after a few years of rapid increase. DIBS will facilitate the greed of speculators and these people needs just 2-3 years to make big gains by paying just 10%. Up till this point, I do agree.
For many speculators, paying 10% is indeed a very easy way to earn huge gains. However, this is also where RPGT helps to lessen some of these speculative activities because with RPGT, the overall return is even lower because some portion of it has to be paid as tax. I have a few friends who were buying properties like vegetables from the market. Sorry, I was not joking. A few of them bought a RM600K condo within just 30 minutes. Indeed, RM60K was not that hard plus there’s nothing else to be paid until they sell the property once its completed. However, these same few friends has not purchased anything else after RPGT was introduced. One reason was they feel paying the tax is too ‘heart-pain’ (chinese dialect) and thus they prefer to use that money for something else instead. So, even if RPGT did not stop everyone, it stopped a few of my friends and I seriously think it stopped many other like-minded property buyers.
In terms of prices, it is still showing an increase. I seriously think this is also because the new property launches were for the higher end ones, thus it caused the average price to increase. This is also where the most overbuilding is. Not many people can afford to stay in homes over RM1 million, not even majority of the managers earning a salary close to five figure. Majority would be using the latest smartphones, driving a Segment C Japanese car but in terms of home sweet home, I know of many who would not be willing to pay over RM1 million for it.
Datuk Dr. Goh further stated that with the current slowdown, he hope that it would lead to cheaper houses in the near future. In fact he said that all the promises of affordable housing during the general election has not yet been fulfilled. I think he was referring to both the federal and the state governments. He asked that property developers manage their expectations in terms of profits, it will no longer be like few years ago. For the future, this cooling down in the property market may be a boon to all.
Ok, I said I softened my stance about DIBS for First Time Home Buyers. However, if I can only choose ONE, I would still say DIBS should be reinstated for first time buyers. Nevertheless, if it can be shown that average property prices are really coming down after years of increase, then I will then say perhaps for first time home buyers, something else should be done for them instead of DIBS. Let’s look at what 2014 would bring for the property prices and then will make my next decision.
written on 16 Sept 2014
Next suggested article: 100,000 new units vs 140,000 new household formation. Prices up? Do not agree.