Property Investment 101: How governments can encourage property buy
Sometimes, intervention is necessary to restart the engine for the property market
Governments do not usually play the role of ‘pushing’ up the property market because they are supposed to leave it to the market. However, there are times when the transactions are too low due to negative sentiments or the property market needed a boost as it also contributes to the GDP growth of the country as well. There are many ways which the governments could do to increase the attractiveness of the property market to the potential buyers.
Certain exemptions, special incentives or even to get the help of the property developers to reduce their selling price too. Here’s what the Chinese (China) government is doing to help the property market. It used to be too hot to handle and now it’s too cold for comfort.
Article in nst.com.my China’s capital city Beijing announced steps on Wednesday to reduce the cost of buying a home, including cutting mortgage interest rates and the minimum down-payment ratio, to try to boost the local property market.
Beijing is lowering the minimum down-payment ratio for buying a home to 20 per cent from 30 per cent, and for some second home buyers to 35 per cent from 40 per cent, the statement said.
The city is also reducing the floor rate for a first-home mortgage to the loan prime rate (LPR) minus 45 basis points. Previously, the floor was the LPR plus 10 basis points. Do read the full article here: Article in nst.com.my
What can the Malaysian government do?
Actually, many state governments are striving to build more affordable homes and it’s not just the federal government. However, what needs to be done is to ensure these were built based on location which has demand and not for the quantity which is needed. It’s safe to say that if a certain location is too far away, the costs of travelling in the long run may still be high even if the entry cost / price to the property is low.
The interest rate ESPECIALLY for first time home buyers should always be in the focus. Please DO NOT do a blanket one covering all buyers. Currently, the banks do not really distinguish whether it’s the first property or the second property. They just look at the credit worthiness of the person. Unfortunately, this also meant that some first time home buyers could not compere with experienced investors.
When the focus is narrowed, then the first time buyers could get more incentives / benefits versus every buyer receiving similar kind of exemptions.
I would love more incentives but I would love it more if the government could help the first time home owners more. That should be the right of all Malaysians; to own a property. That’s how the Singaporean government ensures everyone will prosper when the property prices move upwards. Remember, without a property, then one would have to pay rental forever and ever.
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