Re­hda: Two rea­sons for un­sold prop­er­ties

> End-fi­nanc­ing is­sues, loan re­jec­tion con­tinue to plague mar­ket

The Sun (Malaysia) - - SPEAK UP - BY EVA YEONG

PE­TAL­ING JAYA: End-fi­nanc­ing is­sues and loan re­jec­tion re­main the top rea­sons for un­sold prop­er­ties in Malaysia, said the Real Es­tate and Hous­ing De­vel­op­ers’ As­so­ci­a­tion Malaysia (Re­hda).

Re­hda pres­i­dent Datuk Seri Fateh Iskan­dar Mo­hamed Man­sor ( pix) said end-fi­nanc­ing is­sues have plagued the prop­erty mar­ket since 2014.

“De­mand is still strong but buy­ers are not get­ting the de­sired end fi­nanc­ing. Based on feed­back from buy­ers, most banks are giv­ing 75% to 80% to­day,” he told re­porters at a brief­ing on Re­hda’s Prop­erty In­dus­try Sur­vey 1H 2016 yes­ter­day.

Fateh Iskan­dar said al­though the 70% loan to value ra­tio only ap­plies to pur­chase of third prop­er­ties and be­yond, many first-time home buy­ers are get­ting 75% fi­nanc­ing from banks.

The top five fi­nanc­ing is­sues faced by buy­ers are: credit his­tory (CCRIS, or Cen­tral Credit Ref­er­ence In­for­ma­tion Sys­tem/CTOS, a credit re­port­ing agency); in­el­i­gi­bil­ity of buyer’s in­come; lower mar­gin of fi­nanc­ing; bank re­quest­ing more doc­u­ments; and lim­ited quota for low-cost/af­ford­able hous­ing.

Re­hda’s sur­vey, which was car­ried out be­tween Jan­uary and June this year among its mem­bers, re­ported that the ma­jor­ity (24% of re­spon­dents) of loan ap­pli­ca­tions re­jected by banks were for prop­er­ties within the RM500,001 to RM700,000 price range.

This is fol­lowed closely by prop­er­ties in the RM1 mil­lion to RM2.5 mil­lion price range (23%), prop­er­ties in the RM250,001 to RM500,000 price range (21%) and prop­er­ties in the RM700,001 to RM1 mil­lion range (19%).

Of the to­tal 157 re­spon­dents, 71% had un­sold units in 1H 2016, an in­crease from 62% in 2H 2015. In 1H 2015, 78% of re­spon­dents said they had un­sold units.

The num­ber of first-time buy­ers fell by 13% in 1H 2016. Dur­ing the six-month pe­riod, first-time buy­ers made up 34% of all buy­ers com­pared with 47% in 2H 2015.

Up­graders made up 45% of buy­ers in 1H 2016 com­pared with 39% in 2H 2015 while in­vestors made up 18% of buy­ers in 1H 2016 com­pared with 13% in 2H 2015.

In terms of busi­ness op­er­a­tions, 52% of re­spon­dents said that their cost of do­ing busi­ness in­creased up to 10% while 43% re­ported no changes in cost and 5% re­ported re­duc­tion in cost.

Among the cost­cut­ting mea­sures im­ple­mented were re­cruit­ment freeze, less ben­e­fits/perks, less work­ing hours, re­struc­tur­ing, re­trench­ment and salary re­duc­tion.

To boost sales, de­vel­op­ers have re­sorted to cre­ative strate­gies in­clud­ing free­bies, re­view­ing sell­ing prices (in­clud­ing re­bates) and fi­nanc­ing/easy pay­ment schemes.

Fateh Iskan­dar said de­vel­op­ers par­tic­i­pated ag­gres­sively in ex­hi­bi­tions and Re­hda’s Malaysia Prop­erty Ex­po­si­tion re­ported record num­ber of par­tic­i­pants in 2015 and 2016.

Mean­while, 31% of re­spon­dents said they of­fered af­ford­able hous­ing in 1H 2016 com­pared with 43% in 2H 2015. Fateh Iskan­dar said one of the chal­lenges in pro­vid­ing af­ford­able hous­ing is com­pli­ance cost, which has grown from 8% about seven years ago to 24-25% to­day.

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