Stamp duty exemptions for first-time buyers
- First-time homebuyers are entitled to stamp duty exemptions on MOT and loan agreement by price tier, from Jun 2022 to Dec 2023, under i-MILIKI.
- Buyers could save up to RM11,500 (for properties priced RM500,000 and below) and RM14,500 (for property priced above RM500,000 to RM1m).
- Measures are positive, but impact could be limited, given macro headwinds and less lucrative incentives vs. previous HOC.
Stamp duty exemptions for first-time homebuyers under i-MILIKI
? At the launch event of the Home Ownership Programme (HOPE) and ‘Karnival Jom Beli Rumah’ on 15 Jul 2022, Prime Minister Dato’ Sri Ismail Sabri announced that first-time homebuyers w ill enjoy stamp duty exemptions on the instrument of transfer (MOT) and loan agreement under the Keluarga Malaysia Home Ownership Initiative (i-MILIKI).
? The stamp duty exemptions are applicable for sale and purchase agreements between Jun 2022 to Dec 2023, by price tier of the properties as follow s: i) 100% exemption for properties priced RM500,000 and below , and ii) 50% exemption for properties priced above RM500,000 to RM1m. Based on our analysis, first-time homebuyers could save up to RM11,500 (for properties priced RM500,000 and below ) or RM14,500 (for property priced above RM500,000 to RM1m).
i-MILIKI incentives less lucrative vs. previous HOC
? We believe these measures are positive for developers, but the impact might not be significant given that: i) the 100% stamp duty exemption for properties priced RM500,000 and below for first-time homebuyers is an existing policy (valid till Dec 2025); ii) there is no minimum 10% discount for residential properties under HOPE, unlike previous Home Ownership Campaigns (HOC 2019 and 2020/2021), and iii) i-MILIK I incentives are applicable to first-time homebuyers only (vs. HOC, which has a wider coverage).
? We also see macro headwinds, i.e. increasing interest rate and inflation, which could potentially dampen buying sentiment. It remains uncertain whether people w ill purchase big-ticket items during challenging times, despite incentives given, as property prices have more than doubled from 2009.
Reiterate sector Neutral
? We stay sector Neutral, given the potential interest rate hikes (our economist is projecting another 25bp rate hike in 2H22F), higher property overhang (+9% yoy in 1Q22, in terms of total overhang value) and escalating construction costs (arising from building material and labour shortages). These are balanced by the undemanding valuation of the KLPRP Index, at c.0.4x P/BV as of end-Jun 2022, 1 s.d. below its
historical 10-year P/BV of 0.68x. We observe that the KLPRP Index has fallen 15% since end-Apr 22, indicating that the market could have largely priced in the negatives from rising construction costs and a higher interest rate trend.
? We like SP Setia and Sime Darby Property given their experience within the green building space and massive landbank to cater to changes in consumer preferences. Sector upside risk: stronger-than-expected new sales; downside risk is a weaker macro outlook.
