Minimal impact from stamp duty discount, say analysts

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KUALA LUMPUR: The property market stands to benefit from the recently announced stamp duty discount for properties priced above RM500,000, but its impact on the sector could prove tepid.

The government recently said it would reduce the stamp duty percentage for property valued in the RM500,000-RM1mil range to 1.5% from 3% under the Keluarga Malaysia Home Ownership Initiative (i-Miliki) campaign.

The exemption will apply for sales and purchase agreements that are completed from June 1, 2022, to Dec 31, 2023.

To illustrate how the discount works, for a property priced at RM1mil, the first RM500,000 will be exempted from stamp duty, while the subsequent RM500,000 will be charged a stamp duty of 1.5% amounting to RM7,500.

Hong Leong Investment Bank (HLIB) Research expects the initiative to boost home buying in the ailing property market, although it noted that the incentive is less attractive compared to what was provided in the Home Ownership Campaign from 2019 to 2021.

Under that earlier campaign, the stamp duty for property up to RM1mil was exempted while property valued above RM1mil was charged a 3% duty.

"This latest i-Miliki campaign, while not as attractive as HOC, could nonetheless help to tilt the equation slightly towards the positives.

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"However, due to the general risk-off sentiment in the market and as investors continue to juggle the property market developments, investors are likely to stay on the side lines while awaiting for more clarity and signs of sector improvements," it said in note.

However, the research firm said the development could be particularly positive for SP Setia Bhd and UEM Sunrise Bhd as the sales of these two developers were the most impacted following the end of the Home Ownership Campaign, going by their 1Q22 results.

HLIB reiterated its "neutral" recommendation on the property sector, with Sunway Bhd and Matrix Concepts Bhd as its two top sector picks.

Meanwhile, RHB Research is also of the view that headwinds in the property market will mostly offset the positives of the i-Miliki campaign.

"We think prevailing concerns on macroeconomic headwinds, including rising inflationary pressure and weakening of the MYR, will deter demand for property over the next six months.

"Coupled with the expectation of higher interest rates ahead, many potential property buyers will likely hold back their purchases over the near term.

"We also note that some of the developers are still offering stamp duty waiver for certain products as a continuation of the HOC in order to stimulate demand," it said, while maintaining "neutral" on property.

Its top picks are Matrix Concepts Bhd and IOI Properties