KUALA LUMPUR: The Housing and Local Government Ministry will propose that the ceiling price of homes that do not require a down-payment for purchase be raised to RM350,000.

Minister Datuk Chor Chee Heung is expected to table the proposal at next week’s Cabinet meeting.

Chor said that raising the ceiling price would benefit more people.

“The request is not unreasonable because for someone to own a house below RM220,000, one would have to travel a bit further even with the highway,” he told reporters yesterday after opening the property fair Mapex 2010.

In his Budget 2011 announcement, Prime Minister Datuk Seri Najib Tun Razak proposed that first-time house buyers with a household income of less than RM3,000 be allowed to obtain a 100% loan if they buy a house for RM220,000 or less.

Yesterday, Real Estate and Housing Developers Association (Rehda) deputy president Datuk Fateh Iskandar urged the Government to consider increasing the ceiling to a more realistic figure like around RM350,000.

“Houses priced at RM220,000 are really hard to come by these days and if this price ceiling is not increased, this particular incentive and inducement will not benefit the rakyat, especially those living within the Klang Valley and Penang,” said Fateh.

He also suggested that instead of looking at the buyers’ household income, their disposable income should be considered.

On another matter, Chor said his ministry was working with the Natural Resources and Environment Ministry on amendments to the Building and Common Property Act.

“We aim to table the amendments in Parliament by March next year with the goal of detailing the boundaries, roles and responsibilities of strata title owners, property managers and developers so that the rights of home owners can be better protected,” he said.

He said the amendments were needed because they would spell out how house owners could exercise their rights under the Act and how many votes a house owner would have if he or she owned more than one unit in the entire building.

SOURCE: The Star

GEORGE TOWN: The state government is reviewing the various charges imposed on residential projects priced between RM300,000 and RM350,000 per unit on the island, and RM200,000 and RM250,000 on the mainland.

Chief Minister Lim Guan Eng said that the move would encourage developers to build more affordable housing.

“Developers should look at areas outside the traditionally popular development spots and focus on new areas such as the southern part of mainland Penang and Batu Kawan, where the second Penang bridge is being built.”

He added that to streamline the development of housing and plan more affordable housing, the state government would be setting up a Penang Housing Board at the next state assembly sitting beginning November 1.

“The proposed housing board will deal with all issues relating to government housing and also play an active role in private housing development,” he said in his speech at the 36th annual dinner of the Real Estate Housing and Developers’ Association (Rehda) last night.

Lim said that for the first half of 2010, the property market activity showed a marginal decline of 0.6% from the second half 2009 which saw 11,858 transactions.

“The value of transactions registered 15.3% growth in the first half 2010 against the second half 2009. “

Rehda (Penang) chairman Datuk Jerry Chan in his speech said Rehda’s theme this year is ‘Greater’.

“This is what we want for the state. Greater in development, greater in job and wealth creation, greater in security and transportation and greater in the delivery system.

“Of course all of us want greater profits (too). However, recently we are seeing greater charges, fees and levies. Greater pain!” he quipped.

Chan said Rehda also wants a better format to process approvals, not speedy rejections because of insufficient time for compliance.

SOURCE: The Star

SHAH ALAM: The Housing and Local Government Ministry does not foresee a property “bubble” in the country, where a rise in prices will be followed by a rapid reduction.

Minister Datuk Chor Chee Heung said that so far this year, property prices had increased by 37%, unlike Singapore and Hong Kong where the figure had already exceeded by 35% last year.

He said the increase in property prices since 2008 was due to the high cost of land, building material and entry of foreign companies into the sector.

“We still have a long way to go before reaching a property bubble,” he told reporters after the launch of Setia City here yesterday.

Chor said local property prices were still much lower and “nowhere near” those in Jakarta, Hong Kong and Bangkok.

“Last year and this year, the most sought after homes were priced between RM150,000 and RM180,000,” he pointed out.

Chor said the ministry and Bank Negara were monitoring the situation in the industry and if need be, action would be taken to prevent hardship to the people and economy.

He said that even developers had realised that there would be a drop in prices if they continued building properties.

“That is why since late last year, there was a reduction of 19% in the number of houses built nationwide,” he said.

On another matter, Chor said the ministry had proposed to the Cabinet the incorporation of pro-green features, like the rain harvesting system, as a requirement in the Uniform Building By-Laws.

In his speech, the minister said “green builders” held a competitive edge over their traditional counterparts as the norm now was towards energy-efficient buildings and water conservation facilities.

“The Malaysian Green Building Index (GBI), a rating tool that was launched early last year, provides an opportunity for developers and building owners to design and construct green and sustainable buildings.

“Going green is important but it is equally vital, if not more, that the maintenance of such initiatives over the long term is sustained,” he said, complimenting SP Setia Bhd, the developer of Setia City, for building an integrated green commercial hub.

Setia City is a 97ha integrated green commercial hub that will comprise office towers, hotels, service apartments and a retail mall.

SOURCE: The Star

LEADING think-tank Malaysian Institute of Economic Research (Mier) is disappointed that the 2011 Budget did not provide measures to address high household leverage.

Executive director Dr Zakaria Abdul Rashid described it as a key disappointment in the Budget, besides the lack of measures such as those to address property speculation or tax on gaming and brewers or lower personal tax.

Economists have warned of a household bubble taking place in Malaysia if the high household debt levels are not addressed immediately.

They expect the government to announce policies to check on debt service burden.

US investment bank Citi recently remarked that aggregate household assets were 2.5 times household debt, while aggregate US household financial assets were 3.5 times their debt before the subprime crisis.

According to a Bank Negara Malaysia report, total household borrowings grew at an average annual rate of 9.5 per cent to RM561.5 billion as at end-August 2010 over the past four years. This accounted for 78.1 per cent of gross domestic product (GDP).

About 45 per cent of household borrowings were to finance the purchase of residential properties, while financing for car hire purchase accounted for 20 per cent of total debts.

Mier senior research fellow Dr Foong Kee-Kuan said the loan-to-value ratio (LTV) must be lowered to check on the growing debt level.

"With the Overnight Policy Rate at 2.75 per cent and the economy moderating in the second half of the year through 2011, servicing these loans would pose a problem as disposable income shrinks," Foong said at a Mier media briefing on the third quarter economic outlook.

He said it was expected that the central bank would lower the LTV in line with similar moves undertaken by Singapore, Hong Kong, China, Korea and Taiwan.

It has been rumoured that the LTV could be reduced for the third and subsequent house purchases after the Prime Minister's earlier announcement last month that house financing might be capped at 80 per cent from 90 per cent for third and subsequent mortgages.

Foong said while the banking sector may not favour the move as it would affect the revenue, lowering the LTV ratio and imposing tighter credit card conditions would address the household debt problem.

Meanwhile, Zakaria said Mier maintains its GDP growth forecast at 6.5 per cent for 2010 and 5.2 per cent for 2011.

Economic growth is expected to taper off in the second half due to weaker global environment and disappearing low-base effects.

"These forecasts are supported by recent in-house surveys," he said, referring to the surveys on the automotive industry, residential property, tourism market, retail trade as well as business and consumer sentiments.

The Business Conditions Index declined to 104.9 points in the third quarter, which more than offset the surge in the Consumer Sentiment Index to 115.8 points.

Other indices also painted a similar gloomy environment ahead although they remained above the 100 points-mark.

Meanwhile, Mier anticipates the OPR to remain at 2.75 per cent till year-end and trend higher to 3.25 per cent in 2011, in tandem with a higher overall CPI forecast of 2.5 per cent year-on-year.

It also forecasts the ringgit to trade at 3.200 by end-2010 before strengthening further to 3.100 in 2011.

Recent forex liberalisation measures had lifted the ringgit's sentiment and should be conducive for further development of the financial market.

However, these measures also generated more volatility to exporters and may therefore require active monitoring by the central bank, Mier added.

SOURCE: Business Times

The Malaysian Institute of Economic Research (MIER) is concerned with the rising household debt level which stood at 77 per cent of Gross Domestic Product (GDP) last year.

In Bank Negara Malaysia (BNM)'s 2009 annual report, household debt was reported to have risen to 76.6 per cent for the year, the highest in Asia, from 63.9 per cent of GDP in 2008.

"Loan-to-value (LTV) ratio should be reduced to address the rise," said Senior Research Fellow Dr Foong Kee-Kuan.

"Going forward, there should be more business loans than household loans. More business loans will contribute to our growth," he said. The concern was highlighted during a media briefing on the Malaysian Economic Outlook report released here today.

Quoting the central bank's Banking and Monetary Indicators report, MIER said household loan in April, May, June, July and August this year stood at 10 per cent, 11.7 per cent, 12.5 per cent, 11.9 per cent and 11.8 per cent respectively.

"Our household debt level is a concern and no measures were mentioned to address this in the Budget 2011.

"If this scenario continues along with slower economic growth, it can translate into unemployment and lead to people having problems in servicing their loans," he added.

He said although lowering LTV would not be favourable for the banking sector as it would reflect in revenue, the escalating household debt must be addressed to prevent risk in future.

In its report, MIER said it was anticipating the OPR to be steady at 2.75 per cent until end of this year. "This along with reduction in mortgage LTV ratios and tighter credit card conditions would address the rising household debt problem," it cautioned.

The OPR would trend higher to 3.25 per cent in 2011. In a recent research note, Kenanga Research had also said the central bank should consider imposing tighter borrowing limit for the property sector to avert potential over-leveraging on the household segment and speculations.

It suggested that bank loans should be lowered to between 70 and 80 per cent value ratio for a third mortgage. — Bernama


SOURCE: Business Times