Home Development Time to review lending guidelines, property portal tells Putrajaya ahead of budget...

Time to review lending guidelines, property portal tells Putrajaya ahead of budget reveal

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KUALA LUMPUR — Putrajaya should consider making it easier for potential house buyers to borrow to fund their property purchases, a leading property portal has said ahead of next week’s unveiling of Budget 2016.

PropertyGuru’s Sheldon Fernandez acknowledged that the federal government’s policies on housing loans have succeeded in reducing property speculation, but noted that it may be timely to review these measures, particularly for first-time homeowners.

“Feedback from industry stakeholders – real estate agents, end-financiers, property developers and homebuyers, show a clear consensus; that it may timely to re-look current lending policies to make it more conducive to obtain financing,” the country manager for PropertyGuru Malaysia said in a statement.

Sheldon’s statement comes a week before the release of the annual government budget, where housing policies such as stricter lending rules had in the past been introduced to prevent the driving up of property prices through property flipping and speculation.

But Malaysians who fall within the middle-income group are today struggling to buy property, largely due to strict rules on bank loans.

“Loan rejections have become one of the top reasons for low transaction volume. Our own customer sentiment survey shows a that difficulty in attaining bank loan approvals is a key area of growing dissatisfaction among buyers.

“Most affected are middle income households who do not quality for low-cost schemes but also find it difficult to buy from the market due to financing issues,” he said.

In the same press statement, PropertyGuru noted Khazanah Research Institute’s recent findings of the country’s housing market being at an “unaffordable” level.

To illustrate the unaffordability of housing in Malaysia, PropertyGuru cited the Real Estate and Housing Developers Association (Rehda)’s data of property launches here.

Rehda’s data showed only 4,373 out of 10,877 units launched in this year’s first six months were sold, with the rejection of loan applications being among the top reasons for unsold units, it said.

“Importantly, most of the unsold units are within the RM500,000 to RM1 million range, which is the preferred choice for most middle-class urban families, clearly indicating an unaffordability issue within the property sector,” PropertyGuru said.

PropertyGuru also said data from its Customer Sentiment Survey showed that 3 out of 4 respondents expressed dissatisfaction with current property market conditions.

In April this year, Malay Mail Online reported real estate agents saying that it was a common practice for young adults in their 20s or 30s to borrow from their parents or use credit cards to pay for downpayment of houses, instead of paying for the 10 per cent sum of the entire property price with cash.

According to the Counselling and Debt Management Agency’s (AKPK) fact sheet last January, the number of counselling cases it received increased from 4,368 cases in February 2014 to 6,581 cases in January this year.

More than half, or 56 per cent, of those who enrolled in AKPK’s debt management programme by the end of last year comprised young adults from age 20 to 40.

About 83 per cent of those who took part in the debt management programme have a combination of debt comprising housing loans, car loans and credit card debt, according to AKPK.

Following the report, Bank Negara Malaysia (BNM) urged financial institutions to lend responsibly to ensure the public do not take out loans beyond their means to repay.

BNM said such lenders must screen loan applicants to ensure they are able to meet are able to meet the entirety of all their credit commitments.

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