Focus remains on affordable housing in property sector
KUCHING: The focus remains on affordable housing in Malaysia's property sector amid weak affordability and low supply of affordably-priced properties.
In a Malaysia Property industry focus, AllianceDBS Research Sdn Bhd (AllianceDBS Research) revealed that it expected the the upcoming Budget 2017 to continue its focus on increasing the supply of affordable public housing (priced less than RM400,000) to boost homeownership.
“There are already various financing schemes and affordable housing programmes to address the challenges of firsttime homebuyers in purchasing homes,” the research house said.
As home ownership continues to be a national concern, the research house believed the government will expedite the delivery of affordable public housing.
However, AllianceDBS Research pointed out that private developers face the challenge of supplying affordably- priced properties at the expense of lower profitability due to the rising cost environment (land, compliance, construction).
“Developers will have to revise their product offerings to incorporate more ‘value-buy' properties with differentiating lifestyle amenities that will distinguish themselves from lower-priced public housing,” it said.
The research house believed township developments will offer better sales performance going forward.
“Property developers have been facing challenges to meet their respective sales target due to the subdued property market in view of the high household debt and weak consumer sentiment, leading to downward revision in 2016 sales target for several large developers.
“Understandably, there have been more developers calling for the government to ease the lending guidelines which have purportedly resulted in high rejection rates for potential property buyers,” AllianceDBS Research said.
The research house noted that the rejections are largely attributable to high debt service ratios, adverse credit and insufficient income to support property financing.
It has nevertheless pointed out that the outstanding loans for residential properties extended by financial institutions grew by 10.1 per cent year on year (y-o-y) to RM460.2 billion as at end-July 2016, indicating more disbursement to eligible home purchasers.
“Also, Bank Negara Malaysia has pointed out that about 75 per cent of borrowers or approximately 1.5 million borrowers with housing loans are first-time house buyers,” it said.
AllianceDBS Research believed the existing macro- prudential measures imposed are not overly punishing vis- à- vis those in Singapore, and serve to rein in excessive speculation in the property sector.
The research house noted that given the high household debt at 89 per cent of gross domestic product (GDP), further easing in banks’ prudent lending practice may not bode well for the long-term health of the sector.
Meanwhile, AllianceDBS Research highlighted that demand from genuine homebuyers for affordably-priced properties has been firm despite the relatively softer market.
“Developers have also been focusing on the affordable housing segment by offering smaller homes that come with cheaper price tag,” it said.
“Asmoredevelopersaretargeting first-time homebuyers which are also qualified to purchase lowerpriced public housing, private developers may have to come out with better value products to capture the target buyers.”
The research house believed access to financing remains intact for eligible property buyers, and various financing schemes have been provided by the government to help first-time homebuyers to purchase their first residential properties priced below RM500,000 per unit.
Overall, AllianceDBS Research opined that Matrix Concepts Holdings Bhd ( Matrix) is the best proxy to affordable housing as the group mainly focuses on landed properties priced below RM600,000.