KUALA LUMPUR: Malaysians have to fork out more money from today to buy more than two houses after Bank Negara slammed the brakes on property speculation.

The central bank announced with immediate effect the implementation of a maximum loan-to-value (LTV) ratio of 70% for people buying their third or more house, meaning those wanting their third property onwards have to come out with their own cash amounting to 30% of the value of the house.

“Financing facilities for purchase of the first and second homes are not affected and borrowers will continue to be able to obtain financing for these purchases at the present prevailing LTV level applied by individual banks based on their internal credit policies,” Bank Negara said in a statement yesterday.

The central bank said at the national level, property prices had increased steadily and remained manageable compared with the historical trends but for certain hot locations, particularly around the urban areas, faster growth in prices and transactions had been seen.

“This is further supported by an increase in financing provided for multiple unit purchases by a single borrower, suggesting increasing investment activity that is of a speculative nature,” it said.

SOURCE: The Star

PETALING JAYA: Bank Negara’s imposition of a maximum loan-to-value ratio (LVR) of 70% for a third and subsequent housing financing facility taken by a borrower is seen as a timely pre-emptive measure to avert unhealthy speculative activities and a potential property bubble, industry players concurred.

With the latest measure that takes immediate effect, people buying their third and subsequent house would be required to pay a higher down-payment than the current standard minimum of 10% of the value of a house.

In a statement yesterday, the central bank said financing facilities for purchase of first and second homes would not be affected and borrowers would continue to be able to obtain financing for these purchases at the present prevailing LVR level applied by individual banks based on their internal credit policies.

Real Estate and Housing Developers Association president Datuk Michael Yam said the association supported the measure as it would ensure a healthier and orderly housing market.

“There are some hot spots in the housing market where prices have appreciated higher than the average price increases in other locations. As financing for the first and second housing properties will not be affected by the ruling, the move is not expected to dampen the performance and growth of the housing property sector.

“Meanwhile. the LVR cap on those buying their third and subsequent house should stem speculative buying and ensure a more sustainable housing market,” Yam added.

Mah Sing Group Bhd group managing director cum group chief executive Tan Sri Leong Hoy Kum said the move was not surprising as Bank Negara had given earlier indications of such a move.

“The move should not significantly affect the overall sentiments of the market which comprises mainly first-time buyers and upgraders.”

Leong said there was no property bubble as price increases were only for properties with good concepts in good locations.

“As long as developers offer quality properties with good concepts in prime locations, there should still be takers due to our strong employment market, low interest environment and good liquidity in our financial system,” he added.

National House Buyers Association honorary secretary-general Chang Kim Loong said the measure would help curb speculative buying in the local housing market.

“Prices of landed residential properties have increased substantially over the last five years.

“We are glad that the Government has heeded HBA’s call with regards to the LVR. We will next seek to make housing more affordable for middle-income households and have pricing control for this group of buyers.

“HBA has urged the Government to set up a Special Task Force with such an objective and aspiration,” he said.

RAM Ratings head of financial institution ratings Promod Dass said: “Given this LTV measure only applies to the third home loan onwards, there should still be ample opportunities for banks to focus on first-time home buyers and perhaps to finance the purchase of a second home for lifestyle upgrading purposes.”

“All said, the level of prevailing interest rates would be an important factor too for the health of home loans, given that the bulk of outstanding home loans are based on floating interest rates,” he said in an e-mail interview.

The Association of Banks in Malaysia (ABM) chairman Datuk Seri Abdul Wahid Omar said while the banking sector supported house ownership, ABM agreed that appropriate measures should be adopted to avert unhealthy speculative activities which could lead to a property bubble.

Abdul Wahid, who is also Malayan Banking Bhd president and CEO, said: “In my view, the application of the measure is clear and specific and the LTV ratio itself, optimal.

Given that financing for first and second housing properties will not be affected by the ruling, the move is not expected to dampen or have an adverse impact on the growth of residential property development sector as well as the banks’ house financing business.

“Affordability of homes for genuine buyers will be preserved as banks continue to lend prudently under their respective risk management framework.”

On the Financial Capability Programme, he said it underscored the view shared by ABM that education was paramount in the promotion of sound financial and debt management.

Details of the implementation of the programme would be announced next month.

SOURCE: The Star

Malaysia’s central bank placed a limit on the loan-to-value ratio for people taking out third mortgages to buy homes in a bid to moderate “excessive” investment and speculation in urban areas.

A maximum lending limit of 70 per cent will take immediate effect, Bank Negara Malaysia, the country’s central bank, said in a statement today. Banks typically provide loans of as much as 90 per cent of the value of the property.

Malaysia joins Singapore, Hong Kong and China in introducing measures to cool their property markets on concerns that asset bubbles are forming as home prices surge. Singapore in August increased down payments for second mortgages and imposed a stamp duty on property held for less than three years.

“Specific locations, particularly in and round urban centers, have experienced faster growth, both in the number of transactions and in house prices,” the central bank said. “This is further supported by an increase in financing provided for multiple-unit purchases by single borrowers, suggesting increasing investment that is of a speculative nature.”

The Kuala Lumpur Property Index, comprising 88 developers’ shares, has surged 28 per cent this year, outpacing an 18 per cent gain in Malaysia’s benchmark stock index.

The targeted implementation of the loan-to-value ratio is expected to moderate the “excessive” speculation in the property market, it said, without providing supporting data.

Malaysian home sales may rise 26 per cent to a record RM52.9 billion (US$17.2 billion) this year, boosted by low lending rates and liquidity, Yeow Yeonzon, an analyst at Kenanga Investment Bank Bhd., said in a report on Oct. 14. Loans applied for purchasing residential properties rose 32 per cent in August from a year earlier to RM15.4 billion, according to central bank data.

The government in January imposed a 5 per cent capital gains tax on property sold within five years of their purchase. — Bloomberg

SOURCE: Business Times

A MARA Skills Institute (IKM) and a government polytechnic will be built in the Tasek Gelugor parliamentary constituency in Penang under the 10th Malaysia Plan (10MP).

Tasek Gelugor MP Tan Sri Nor Mohamed Yakcop said the RM50mil institute would be built in Tasek Gelugor town while the Politeknik Metro, to cost between RM10mil and RM20mil, would be built in Ara Kuda.

“We have identified the locations for the two projects. Construction is expected to start early next year and be completed in two years,” he told reporters at his service centre in Sungai Dua near Butterworth on Saturday after handing over food rations to 600 recipients of various races, mostly Indians, in conjunction with Deepavali.

Nor Mohamed said the two educational institutions were among new vocational and technical schools which the Federal Government would build in various parts of the country under the 10MP to cater to students who are not keen on academic studies.

“Those who are not interested in subjects like biology, physics, chemistry or history can take up vocational and technical courses which will enable them to find jobs such as chargemen, carpenters or wiremen,” he said.

He urged parents to allow their children to pursue courses in skills subjects if they wanted to do so as there was demand for skilled workers in the country.

Nor Mohamed said skilled workers could earn as much as professionals.

In his speech earlier, he told recipients of the food rations to ensure that their children have a good education.

He said they could earn a good income with a good education and thus be able to help the less fortunate.

Also present were Permatang Berangan assemblyman Shabudin Yahaya, Teluk Air Tawar assemblyman Datuk Jahara Hamid, Tasek Gelugor MIC chairman B.S. Maniam and Tasek Gelugor PPP chairman P. Thayalan.

SOURCE: The Star

THE Northern Corridor Implementation Authority (NCIA) is committed to making Penang the next logistics hub and a dynamic import and export gateway for the Northern Corridor Economic Region (NCER).

NCIA chief executive Datuk Redza Rafiq cited the second Penang bridge, Penang International Airport expansion, Penang Sentral Integrated Transport Hub, Penang Port expansion and Ipoh-Padang Besar double tracking rail projects that would make Penang a main hub for export.

“As such, we strongly believe that Penang has great potential to be developed further into a modern, integrated and green transport and logistics hub.

“This will benefit not only the state but the NCER as a whole,” he said at the inaugural NCIA Public Forum entitled ‘Revisiting, Reviving and Refocusing NCER: Implications on Transport and Logistics’ at Wawasan Open University in Penang on Thursday.

The forum, jointly organised with Socio-Economic and Environmental Research Institute, attracted about 200 participants from government agencies, industry players especially from the logistics industry and university students.

Redza said transport and logistics were crucial and function as key enablers to transform the region into an economic powerhouse.

“They enhance connectivity networks and linkages to spur domestic and international business activity, trading, investment and tourism, besides supporting the industrialisation process.” he said.

With improved transport and logistics services across industries, goods, services and people could move faster domestically and globally, he noted.

“This in turn would help to attract more investment in the NCER, making it a region of choice not only for investors but also tourists, high net worth individuals and skilled talent,” he said.

He added that the Federal Government had taken steps to improve public transportation such as the Land Public Transport Commission (SPAD) to carry out initiatives under the National Key Result Area (NKRA) for urban public transport.

“The people can thus look forward to improved public transportation facilities and services in the near future,’ he added.

Associate professor Dr Anthony Chin from the National University of Singapore, who is also an Associate Professor of Transport Academy and principal researcher with the university’s Centre for Transportation research, was the forum’s guest speaker.

He spoke on subjects concerning Malaysia’s trade competitiveness in relation to logistics and transport facilitation covering maritime, aviation and land modes.

He also suggested ways for the NCER to boost growth, such as by cultivating high value cash crops like the virgin coconut oil, which was highly valued in urban and export markets.

SOURCE: The Star