Research house warns of potential systemic risk from property crowdfunding

November 6, 2018 | By | Reply More

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PETALING JAYA: Although the property crowdfunding measure, dubbed FundMyHome scheme, could provide some near-term boost to the market, Kenanga Research said the scale of how this will be implemented will determine the longer-term health of the sector and potentially create a systemic risk in the property and banking sectors.

This, in turn, will have an impact on the local economy.

Kenanga Research believes that many developers will be supportive of this initiative as it is an alternative source of end-financing for buyers.

“A more preferred approach is if this scheme is to fund government-backed affordable housing projects and only on selective ones as well,” it said in a research note.

RHB Research, however, said it was unsure of the effectiveness of this crowdfunding platform as some of the developers it spoke to did not have the relevant products (that is, units priced below RM500,000) to be sold under this system while some were reluctant to sacrifice profit margins. Consequently, many may not be willing to put up their marketable products for sale under this platform.

Under FundMyHome, first-time buyers need pay only 20% of the property price and the balance is contributed by participating institutions, which get a share of future profits should the house value appreciate.

Meanwhile, analysts expect property sales to slow down in the fourth quarter as buyers may take on a wait-and-see approach to take advantage of the stamp duty waiver, while the upcoming property crowdfunding could be the swing factor the sector needs.

However, Maybank IB Research noted that stamp duty exemption for first-time home buyers for properties priced between RM300,000 and RM1 million from Jan 1, 2019 to June 30, 2019 should stir some buying interest in properties in the first half of 2019.

This is because most developers are already giving more than 10% discount on unsold stocks and absorbing the stamp duties for their buyers, hence the waiver should help to improve developers’ margins in first-half 2019.

Developers that could benefit from Budget 2019 are mainly those with high exposure to property products priced below RM500,000, such as Mah Sing, Matrix Concepts, Tambun Indah and – to a certain extent – UOA Development and Hua Yang.

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