Properties priced from RM500,001 to RM700,000 faced the most loan rejections in 1H2016

Property News/ 14 September 2016 Leave a comment

2016property-surveyProperties priced from RM500,001 to RM700,000 faced the highest loan rejection rates, according to almost a quarter of 157 respondents to the Real Estate and Housing Developers’ Association (Rehda) property industry survey 1H2016.

About 24% of respondents agreed that properties in the price range of RM500,001 to RM700,000 faced the highest rejection rates, followed by 23% of respondents for properties in the price range of RM1 million to RM2.5 million, 21% of respondents in the price range of RM250,001 to RM500,000, 19% of respondents for properties in the price range of RM700,000 to RM1 million, 7% of respondents for properties in the price range of above RM2.5 million and 6% of respondents for properties in the price range of RM100,001 to RM250,000.

“Again and again, end financing is the issue for homebuyers today. As you can see from the figures, the bulk of properties which faced rejection rates are the properties in the RM500,001 to RM700,000 price range which are mostly the homes that first time homebuyers and first time upgraders are buying. Those who are buying the RM2.5 million and above properties are not those who need financing because they can afford it,” said Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor who presented the survey findings to the media today.

Fateh noted that the buyers’ profile showed that the bulk of them in 1H2016 were home upgraders and first time homebuyers contributing to 45% and 34% respectively, followed by investors and companies.

“More than half (53%) of these buyers are buying for their own stay, followed by 21% of them buying to upgrade their homes and 16% of them are buying for family members. Only a fraction or 10% of the purpose of purchase is for rental yields,” said Fateh.

“Almost 90% of them are end-users. They are not buying to speculate and only a small number of investors are buying to rent. Maybe in 2010, you can get a rental yield of 6% to 6.5% in hot areas like KLCC. Today, rental yields may be below 5% in these challenging times,” Fateh added.

Some of the financing issues include the credit history of homebuyers, ineligibility of the buyers’ income, lower margin of financing, bank requesting more documents and limited quota for low-cost and affordable housing.

Commenting on the high household debt of Malaysians which has risen from 86.7% last year to 89.1%, Fateh noted that is vital to differentiate good and bad debt.

“About 40% of the debt [of Malaysians] comprises mortgages, while others are automobile loans, credit cards and personal loans. Unlike in a country like Australia, mortgage makes up almost 75% of their household debt. Household debt, today, will create value in the future as property prices will increase,” said Fateh.

Out of the 157 survey respondents, 108 noted that they faced end-financing problems while the remaining 49 did not.

Source: TheEdgeProperty.com.my

  1. Lol
    September 14th, 2016 at 20:38 | #1

    They claim end financing is the problem. We all know the real problem is with the pricing. Perhaps Developers should sell cheaper then there won’t be any end financing problems. That is something they can immediately change to see an immediate surge in transactions. Simple economics.

  2. Macha
    September 15th, 2016 at 09:14 | #2

    The real problem lies with the buyers, who only have themselves to blame for having bad credit history, and also unrealistic expectations (Ex: fresh grads earning less than 3k but wanted to buy over 500k condo…hahaha…keep dreaming). There are still many affordable units which are within reach of first time home buyers if only they managed their finances properly and set their expectations right

  3. SSL
    September 15th, 2016 at 10:05 | #3

    Soon the price will go down. Developer cannot keep selling at high price when no people can afford to repay the loan.

  4. Kta
    September 15th, 2016 at 17:18 | #4

    Genuine First Time homebuyers who are trying to buy their own place to stay are trying to buy 500k -700k properties? no wonder their loans are getting rejected!

    A first time homebuyer is probably a person who has just started working for 3-5 years. Given an average salary of around 5k and most likely having car or study loans as well to service, i doubt they can afford to purchase a home for 500k and above. A real average first time home buyer should be looking at properties priced at most 300k – 400k.

    Again to the REHDA people that stll don’t get it. The problem here is not difficulties in getting end financing, the real problem is these people can’t afford to buy properties priced 500k and above!

  5. Chicken_smell
    September 16th, 2016 at 00:25 | #5

    if developers are willing to lower their profit margin to single digit , then it should be fine
    But , if you are a businessman/developer , how much profit do you want to make ?

    You want to drive BMW or Bentley ? Go shopping in Europe or USA ? Send kids study 3+1 or 0+4 ?

  6. ryu
    September 16th, 2016 at 02:29 | #6

    If developers dropping their profit margin and sell at low price, how about the existing purchasers who invested few hundred thousand of hard earned money??

    Who going to pay for their loss? So, maintain the price high is good enough since Penang Island got so many affordable houses, for sure high destiny as paying lower price. When the population increased annually, supply cut down and the market can absorb it already.

  7. Chicken_smell
    September 18th, 2016 at 20:53 | #7

    Ryu , there is no such as as “guaranteed earnings” in investment. That would be amazing if all investments in Malaysia would earn everyone money … gold haven liao … or buy a GLC-linked company

    Unit trusts , share market, Property, are all investments where the investors or gamblers will have to take risks

    People who buy to stay , won’t feel it if the price gets corrected by -10% to -20%. Because , the price will recover after many many years
    Those who have 1 or 2 extra properties can still rent them out

    Those who have 3 or more properties will have to tighten their belts .. haha

    To answer your question : who is going to pay for their loss ? Their own pocket la ! earn money enter their pocket , lose money , want “someone” else to take the blame ?

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