Prime Minister Datuk Seri Anwar Ibrahim (second from right) inspecting the architectural model of the Putrajaya Madani Residency housing project in Putrajaya during its launch with his government entourage.—Low Boon Tat / The Star

Majority of homebuyers and the property industry will have to thrive on their own means

By Yip Wai Fong

Budget 2025 has brought some good news to the property sector and dampened certain expectations. The clear winners are first-time homebuyers, who will be assisted in the form of government guarantees as well as tax exemptions. The Budget also provides much cheer to East Malaysia, with allocations totalling RM5.9bil for Sarawak and RM6.7 bil for Sabah. The increased allocation, geared towards economic and social development, is expected to create a positive spillover effect on the real estate industry in East Malaysia. 

However, there is little else to celebrate beyond the points mentioned above, despite Budget 2025's shift from new infrastructure projects to the continuation of existing projects and the expansion, upgrading or restoration of various public infrastructure and facilities. Furthermore, measures long requested by the industry, such as reviving the Home Ownership Campaign and streamlining costs imposed by bureaucratic processes, remain unaddressed. The absence of these reforms is a missed opportunity, as cost efficiency from streamlined processes could translate into lower housing prices for all homebuyers.

The following highlights key gains and drawbacks of Budget 2025 for the property industry, along with insights from stakeholders on the allocations—or lack thereof—affecting the sector.

Boon: Individual tax relief of up to RM7,000 on housing loan interest payments (for properties up to RM500,000) and up to RM5,000 (for properties from RM500,000 and up to RM750,000).

Commenting on the Budget, the National House Buyers Association (HBA) honorary secretary-general Datuk Chang Kim Loong said the income tax reliefs on the interest payments for home loans valued up to RM750,000 should not be limited to first-time homebuyers. 

“While HBA supports the tax relief, we feel that such relief should also be given to all existing home owners with outstanding housing loans as this will benefit more rakyat which has been burdened for the past years. As such, the three-year tax relief should start from the date of handover instead of the date of SPA (Sales and Purchase Agreement),” Chang said, referring to Budget’s allowance for tax relief for SPA executed between Jan 1, 2025 and Dec 31, 2027. 

“Tax relief on interests should be applied to buyers irrespective of purchasers from housing developers or the secondary market,” Chang added.

Boon: RM12bil government guarantee under the Housing Guarantee Credit Scheme (SJKP), including step-up financing and the on-going guarantee of RM10bil for first-time homebuyers. 

“HBA welcomes the announcement to guarantee housing loans to help those without stable incomes such as those in the gig economy to buy properties,” Chang said. 

“We hope that SJKP will only be extended to first-time house buyers and only for affordable properties priced RM300,000 and below, and also available for purchasing secondary properties, not just properties directly from property developers as the secondary market comprises most of the transactions,” he added. 

Boon: Increased allocation for Sabah and Sarawak, including for infrastructure such as the expansion of airports (Tawau and Miri) and Phase 2 of the Sabah-Sarawak Link Road 

Sabah Housing and Real Estate Developers Association (Shareda) president Datuk Chua Soon Ping said the Budget's allocation of RM6.7bil signifies substantial federal support for Sabah’s economic growth. 

“The allocation would foster an attractive environment for foreign and local investment, thereby raising demand for housing, commercial spaces and mixed-use developments,” he said, adding that he also welcomed the allocation for the Sabah-Sarawak Link Road Phase 2. 

“This project boosts property development opportunities along the route, encouraging interstate migration and supporting ancillary sectors such as retail and logistics, all of which are crucial for sustainable growth in real estate,” he said. 

Specifically, Chua said that the RM300mil interim special grant should be prioritised to address Sabah’s affordable housing requirements for a growing population. With improved access to affordable housing, he hoped that it would contribute to social stability and community growth, which positively affects the real estate sector. 

“As president of Shareda, I view the 2024 Budget as a significant step forward for Sabah’s economic and infrastructural landscape. This allocation addresses key aspects like connectivity, urgent development needs and sustainable housing solutions, setting a solid foundation for long-term growth in the property sector. These investments open new markets, strengthen investor confidence and create opportunities for impactful, sustainable projects.

“For the real estate sector, the Budget’s framework aligns well with Shareda’s vision for a resilient, competitive and forward-looking property market. By ensuring efficient fund management and timely project execution, we can maximise these benefits, advancing Sabah’s competitiveness, meeting housing demands and elevating the quality of life for all residents,” he said. 

Sarawak Housing and Real Estate Developers’ Association (Sheda) deputy president Louis Ting said while he welcomed the increase of allocation, from RM5.8bil in 2024 to RM5.9bil in the latest Budget, it is still insufficient to close Sarawak’s development gap with Peninsular Malaysia. 

“Decades of limited annual allocations have constrained Sarawak’s ability to build essential infrastructure, including road, rail, sea and air links, resulting in higher business costs and reduced competitiveness for attracting and retaining foreign investment,” Ting explained. 

Ting said with the persistence of housing affordability issues among Sarawakians, the real estate sector’s growth in Sarawak remains uncertain despite the Budget. To address the challenges, Ting advocated for allocations towards upskilling programmes tailored to the Sarawak workforce, collaborating with TVETs and stakeholders such as Sheda, as well as allocations to spur the growth of manufacturing and tourism sectors.  

Bane: No Deposit Madani

Announced in late August, Deposit Madani was a Housing and Local Government Ministry’s (KPKT) proposal to assist first-time homebuyers from among the B40 and M40, where they can receive assistance up to RM30,000 for down payment purposes. While it received wide support including by the Real Estate and Housing Developers’ Association (Rehda), it was however excluded from the Budget announcement. 

Ting, while commending initiatives such as the income tax relief for housing loans, SJKP’s guarantees, as well as the longer repayment terms of up to 40 years for young civil servants’ housing loans, said that the Madani Deposit, should it be implemented, could ease the burden of initial deposits and amplify the effectiveness of the other initiatives.

“Many young aspiring home owners in Sarawak remain unable to benefit due to difficulties meeting down payment requirements or covering the gap between loan amounts and purchase prices. Affordability challenges—rooted in low disposable incomes and high living costs—still present fundamental barriers. We urge the swift implementation of a national housing program dedicated to the unique needs of the Sarawak region,” he said. 

Bane: KPKT’s Program Residensi Rakyat (PRR)

Chang said that although the government’s taking the lead to provide affordable housing is a step in the right direction, the Program Residensi Rakyat by KPKT, which received an allocation of RM900mil, is more harmful to both future home owners and the government. 

According to reports, the PRR will be constructed at the cost of RM300,000 per unit but will be offered to the public at a subsidised selling price of RM60,000, with RM10,000 to RM15,000 out of the RM60,000 set aside for maintenance and sinking fund. The unit owners are prohibited from selling or renting out the unit for 10 years.

Chang contended that the heavy subsidy of RM240,000 per unit is a loss of RM72mil in taxpayers’ money. 

“At a time when the government is talking about rationalising fuel subsidies, this PRR does not make any financial sense,” Chang said, adding that it is very likely that profiteers will take advantage of the disparity between a unit’s selling price and its actual value. 

“Assuming a compounded annual growth rate of only 3.5% per annum, after the moratorium of 10 years is lifted, the PRR unit which cost RM300,000 to build would be valued at RM423,180. After deducting the original purchase cost of RM60,000, the PRR owner would be looking at a profit of RM363,180. 

“With such high profits for the taking, syndicates would very likely emerge and try to take advantage of the system and use proxies to buy as many units as possible,” he said. 

Bane: Uncertainty surrounding MRT3

The Budget was silent on the MRT3 project, despite the MRT Corp putting a public display of the project’s alignment map in Sept, driving up expectations of its impending construction. MRT Corp was also reportedly undertaking land acquisitions involving over 1,000 lots. As transit-oriented developments (TODs) are increasingly in demand in urban areas, MRT3 is seen as a major catalyst for mixed-use developments as well as an impetus to the vision of a walkable city.

CBRE | WTW group managing director Tan Ka Leong said despite the lack of announcement, the government has indicated on-going commitment for the project.

“While there wasn’t a specific announcement in the recent budget, the government has recently revealed a revised plan for the project, with development anticipated to begin in 2026. Although it’s not yet under construction, MRT3 remains in the initial phase, reflecting ongoing government commitment,” Tan said, adding that the Budget’s focus on enhancing current infrastructure is a sound strategy, as it sustains ongoing progress and ensures stability. 

“This approach is beneficial not only for the economy as a whole but also for the property sector as it supports a steady foundation for growth in areas surrounding these infrastructures. By improving existing transportation networks, the government is providing immediate value and connectivity improvements, which can spur further development. The completion of existing infrastructure projects will create a solid foundation for future developments, showing positive growth prospects for the industry,” he said. 

Bane: Carbon tax, EPF contribution for foreign workers, lack of mitigating measures for building material cost hike, lack of initiative to support technological innovation in the industry

The Budget also introduced a carbon tax on sectors like iron and steel—two major construction materials—and the energy industry, to be implemented by 2026. Additionally, the phased implementation of mandatory EPF contributions for foreign workers, combined with the absence of initiatives to curb rising construction material costs, suggests an imminent increase in construction expenses. Also missing is government support for research and development (R&D) in digitalising and modernising construction methods, which could help reduce reliance on foreign labour and optimise material usage and costs.

Rising costs in construction materials have plagued the industry for years. Just before the Budget announcement, developers have called for measures such as ceiling price on building materials. The Works Ministry was also reported to have been paying attention, with Minister Datuk Seri Alexander Nanta Linggi saying that he was closely monitoring the situation after the removal of the diesel subsidy.

However, this on-going concern of the industry did not make it to the Budget, and it now faces more hikes with the coming carbon tax on iron and steel, energy as well as foreign labour. While the Construction Industry Development Board (CIDB) has pushed for the adoption of construction methods such as IBS to reduce cost, there has been little support from the government to bridge the significant initial investment to adopt IBS. 

Overall, Budget 2025 continues the Madani Government’s priority of placing the lower-income people first. While the focus is laudable, the property sector and the majority of the M40 homebuyers will have to be content with remaining largely on their own feet. 

The tax incentives should be made applicable to all existing home owners with housing loans, said Chang.

Tan said the lack of specific announcements for MRT3 is not a setback but reflects the government’s commitment to improve the existing transportation system and provide immediate value.

“For the real estate sector, the Budget’s framework aligns well with Shareda’s vision for a resilient, competitive and forward-looking property market,” Chua said.
—YAP CHEE HONG/The Star

“The Budget 2025 allocation is a welcome step forward but we remain hopeful for a continued commitment to Sarawak’s unique development needs,” Ting said.—YAP CHEE HONG/The Star

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