“It is already a declining market for properties above RM1mil, there are a lot of stocks out there,” Knight Frank managing director Sarkunan Subramaniam(pic) told StarBiz.

PETALING JAYA: The Government has decided to maintain the stamp duty for property transactions valued at RM1mil and above at 3% instead of the 4% announced under Budget 2018 in a move seen as supporting the moribund property market.

The Finance Ministry said in a brief one-page statement that the Government has decided not to proceed with raising the stamp duty, which has an effective date starting Jan 1, 2018.

Analysts said that the increase in stamp duty could hinder potential buyers searching for homes in that price range.

“It is already a declining market for properties above RM1mil, there are a lot of stocks out there,” Knight Frank managing director Sarkunan Subramaniam told StarBiz.

“The move may not spur more transactions but it will maintain the market at the current levels,” Sarkunan noted.

The Real Estate and Housing Developers’ Association declined to comment at press time.

Analysts said that a 1% increase in stamp duty could affect sales especially in a challenging market.

“A 1% increase is small change but right now the property market do not need more cooling measures. It needs stimulus,” said Malaysian Institute of Estate Agents immediate past-president Siva Shanker.

He said many buyers could not afford to buy or were waiting for the right time to buy. Siva believes that the property market bottomed out last year.

“In 2017, we expect the growth would be flat, which means the market has stabilised.

“At the moment, there are a lot of people that are taking the ‘wait and see’ stance, which would go on until next year,” he said.

The Government recently decided to freeze developments of new high-rise luxury residential projects of units costing more than RM1mil, which took effect on Nov 1. The measure was implemented to cut down the glut in Kuala Lumpur and following Bank Negara’s findings on the mismatch of housing demand and supply in the country.

The central bank said there was a huge amount of serviced apartments, small office/home offices, retail and office space that were coming onstream in the next four years.

Bank Negara in its quarterly bulletin in November said supply-demand imbalances in the property market had increased since 2015 – with unsold residential properties already at its highest in 10 years.

The National Property Information Centre (Napic) had said in a statement a week ago that the property market will remain soft oer the next couple of years, and that the overhang issues in the market must be addressed by all parties.

“Both issues – residential overhang and commercial space vacancy are pertinent issues that must be addressed by all parties, particularly local authorities and property developers.

Both must exercise due diligence before arriving at development decision to avoid oversupply situation,” it added.

According to Napic, property transactions in the first half of this year in terms of volume declined by 6% to 153,000 transactions from a year earlier.

It pointed out that the transactions were driven by the affordable homes segment.

“Affordable houses continued to be in demand with more than 83% of the residential transactions within RM300,000 and below,” it said.

Despite the lower transactions volume, Napic said during the period, the value of transaction rose 5% to RM67.8bil from the first half of 2016.

“In a challenging market condition, the number of new residential launches reduced to 28,397 units, down by 9.1% compared with 31,257 units in first half of 2016.

“Sales performance was low at 23.9%, with most of the launches was in the RM400,000 to RM500,000 price range with sales performance grew 28.9% year-on-year,” Napic said.

It added that slow market absorption led to the increase in residential overhang totaling 20,867 units worth RM12.26bil.

In terms of residential properties above RM1mil, Napic showed that there were 2,518 overhang units in the segment in the first half of this year.

During the period, there were 1,535 new units launched, but only 461 units sold in first half of this year. It was an improvement compared to the first half of 2016, which saw 1,683 new units launched and 123 units sold.