IS the current poor market sentiment a domino effect from the various cooling measures implemented by the previous government to curb speculation and runaway inflation on property prices?
Among the measures implemented since 2010 were interest rate hikes, abolishment of Developer Interest Bearing Scheme (DIBS), raising the Real Property Price Index, raising the minimum property purchase price for foreign investors from RM500,000 to RM1 million, and introducing the maximum 70 per cent Loan-To-Value for third residential mortgage loan onwards.
Market consultants said these measures, especially the removal of DIBS and interest rate hikes, had caused a knee-jerk reaction and the market to go downhill.
DIBS was an innovative home financing scheme which aimed to help lower the cost of buying a house. Under DIBS, interest payments would be borne by the developer during the construction period. With its abolishment, buyers can’t avoid the interest costs, thus increasing the expenditure threshold needed for property speculation. As a result, houses may become less affordable to the genuine house buyer.
Media Title: New Straits Times
Date: 30 May 2019