DIBS to make comeback?

DIBSThe Real Estate and Housing Developers Association (Rehda) is in discussion with the Government to bring back the developers interest bearing scheme (DIBS) in a certain form for first-time house buyers of a certain price, Datuk Soam Heng Choon said at a property forum.

Soam, who is also IJM Corp Bhd CEO and managing director, told participants this while moderating a forum session at the Rehda Property Forum 2016 yesterday.

“We are engaging with the Government on this,” he said.

The scheme, which allows a house buyer to pay a downpayment of between 5% and 10%, and the rest on completion of the property was banned on Jan 1, 2014 because it was deemed to encourage speculation.

It was the first cooling measure to be banned in Singapore in its fight against rising house prices.

While the removal of the scheme and macro-prudential measures weeded out speculation, it came at the expense of plummeting sales.

Earlier, Rehda president Datuk Seri FD Iskandar said a survey conducted among 159 developers in 12 states in the second half of 2015 showed that properties between RM250,000 and RM700,000 had the highest loan rejection rate.

He said 67% respondents believe end-financing was the culprit for unsold units.

He said unsold stock would rise and will also affect affordable housing. “Loan rejections rate is more than 50%,” he said.

Unsold units for the first half of 2015 was manageable with 68% of respondents having up to 30% of unsold units. Residential sales rose by a fifth in the second half compared with the first six months, although launches slowed.

Respondents with unsold units mainly in Selangor, Johor and Pahang decreased from 78% in the first half to 62% in the second half of 2015. Respondents were also pessimistic about the first half of 2016.

Soam said stringent lending conditions will come at the cost of high home ownership. Although Malaysia has a high household debt against gross domestic product of close to 90%, the highest in South-East Asia, on closer scrutiny, only 50% of this debt were mortgage-related while in Singapore and the US, mortgage debt make up 74% of their household debts. There is therefore room for mortgage debt to go up.

“Curtail unproductive loans,” he said.

Two of the forum panel speakers Maybank Malaysia head of community financial services Hamirullah Boorhan and Khazanah Research Institute managing director Datuk Charon Wardini, however, said home ownership should not be achieved at the expense of high household debt.

Instead, one of the ways, Charon said, was to modernise and cut house prices by building housing cheaper and faster using Industrial Building Systems (IBS), a housing construction technique used by the Chinese and a company in the Philippines.

“If Philippines can do it, why can’t we?” he asked.Charon also said social housing – or affordable housing – at RM500,000 were “not affordable to many.”

“It should (be capped) at RM300,000,” he said. Charon said in order to put the housing sector into its proper perspective of demand and supply, what is needed is a national housing survey.

“You cannot talk about the Malaysian housing market per se but you can talk about the Kuala Lumpur housing market, or the Johor or Penang market,” Charon said.

It has to be very location-based because the median household in Kuala Lumpur is much higher comparative to some locations outside the Klang Valley, he said.

Source: TheStar.com.my

  1. Jan
    March 11th, 2016 at 00:00 | #1

    If DIBS is back, and only for affordable housing, it will do a lot of good. Aline with the government affordable housing policy, buyer can only sell off the house after 5 years from the date the OC obtained. Which means there will be less worry about a sudden over supply of sub sale property in the market, seems there is a 5 years buffer.

  2. Best
    March 11th, 2016 at 00:02 | #2

    “If Philippines can do it, why can’t we ?” asked Charon. IF PHILIPPINES CAN KICKED THEIR PRESIDENT OUT, WHY CAN’T WE KICK THE PM OUT ?

  3. leong
    March 11th, 2016 at 10:12 | #3

    Sound Good

  4. TightKant
    March 11th, 2016 at 11:46 | #4

    NEVER!!… DIBS should never be allowed back. It serves no purpose, only useful for speculators to gamble on properties and good for property developers to sell unwanted properties in bad locations. Yes, DIBS advocates always say just approve DIBS for first time buyers, trust me, there’s no way they can monitor who is qualified as first time buyer, and in the end, SPECULATORS again!

  5. mellanie
    March 12th, 2016 at 20:28 | #5

    If they are rejected for loans, it means they are buying above what they can afford. Hence having DIBS will only burden them further with instalments they cannot afford. Instead these group of people should look at cheaper housing example low cost instead of affordable housing.

  6. lim
    March 14th, 2016 at 16:52 | #6

    Couldn’t agree more with @mellanie.
    People who cannot save money over certain period of time (the 10% down payment), how do you expect them to pay monthly installment over 30 years?
    It will only bring up bubble and end up with property being sell in auction.

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