Properties 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

A new centre of connectivity is fast appearing, where a new hub for integrated transportation, integrating rail, ferry and bus services, will soon rise in the north. Check it out in the video below.

Serving as the centre of transportation for Penang and the northern corridor, the hub also integrates retail, commercial and residential development within the planned 6 million square feet of development.

This is currently under construction. When completed, it will be the main integrated transportation hub for Penang, combining rail, road, sea and other transportation services – some 200,000 passengers are expected to use the terminal daily when it become fully operation.

Location Map:

Eco Sun, a 74.5-acre mixed-development by EcoWorld at Batu Kawan. Strategically located along Lebuhraya Bandar Cassia, just a short drive away from the upcoming IKEA, Design Village and KDU University College. This is the second development by EcoWorld at Batu Kawan, slated to launch in 2017.

This development will feature a mix of gated and guarded strata landed properties and integrated commercial projects, to be developed in two phases:

PHASE 1A

• Gated & guarded 2-storey terrace house (258 units)

PHASE 1B

• Gated & guarded 2-storey terrace house (300 units)

PHASE 2

• 2-storey shop office (89 units)
• 3-storey shop office (89 units)
• 2-storey drive-thru restaurant (1 units)

The first phase of the project is expected to soft launch in 2017.

Project Name : Eco Sun
Location : Batu Kawan, Penang
Property Type : Mixed development
Total Units: 558 (terrace), 178 (shop offices)
Built-up Area: (to be confirmed)
Indicative Price: (to be confirmed)
Developer : EcoWorld Development

Location Map:

Woodsbury Suites, an on-going service apartment located along Jalan Chain Ferry, within the Harbour Place township development in Butterworth. It comprises 420 units of service suites with built-ups ranging from 550 sq ft to 2,270 sq ft. There are eight contemporary layout design to provide for flexibility in defining space according to individual needs.  To find out more about the location and latest progress, check out the video below. (Available in Full HD)

Click here to find out more about Woodsbury Suites

Location Map:

Putrajaya is risking a subprime crisis if it lets developers assume the role of housing loan creditors who are allowed to charge quadruple the interest rates offered by banks, the National House Buyers Association (HBA) warned.

In a statement to the Malay Mail Online late last night, the HBA urged the government to reconsider the scheme, saying the country’s economy could suffer should a property bubble occur as a result of the “ridiculous” initiative announced yesterday.

“Being a licensed moneylender also known as a licensed ‘Ah Long’ is capital intensive and housing developers, to sustain their business, would continue to price their products at ridiculous and unsustainable prices, this can accelerate a housing bubble like what happened to the US during the ‘Sub-Prime Crisis’.

“HBA humbly appeals to our prime minister who is also the minister of finance to intervene in this ridiculous proposal (bad idea) as it not only does not address the root cause of high property prices, which is due to excessive speculation, but encourages the developer to even price their properties higher and give loans to undeserving borrowers,” it said.

Economist Dr Yeah Kim Leng said the scheme had the makings of a property and financial crisis as developers would have to venture into unfamiliar territory as they deal with buyers who may default on their loans.

“The key is the developers: Whether they can finance the new market segment; that kind of financial risk so it is very, very niche and of course it will boost the property market in terms of increasing demand, but there is also the risk of delinquencies.

“It will seed the next crisis if we do not proceed cautiously, especially to ensure we are not creating another unregulated shadow banking system,” the Sunway University Business School professor of economics said.

Axis REIT Managers Bhd head of investments Siva Shanker also predicted dire consequences for the economy if the government goes ahead with the scheme.

“I think this will spiral and the debt ratio will become higher. The lower and middle classes who need real help are being penalised. The rich who can get bank loans will be borrowing at 4 per cent and the poor who may not get bank loans will have to pay 18 per cent,” he told Malay Mail Online in a phone interview.

Regardless of the type of property or the location, no property purchase would appreciate in value enough to be able to exceed the value of the 18 per cent loan, he stressed.

Bailout?

Given the high interest rates of between 12 and 18 per cent that the developers would be allowed to charge, the HBA feared the government might have to one day rescue developers when buyers default on their loans.

The association pointed out that Malaysians are already struggling to pay their mortgages.

“Property developers will be driven by greed to approve loans to borrowers who do not meet their minimum lending criteria just to close the sale and there will be a very high chance that these borrowers will default on their loan, especially given the high fixed interest rates of 12 per cent to 18 per cent.

“There may be a possibility that eventually housing developers may approach the government for bailout money, claiming that this loan scheme was a form of ‘National Service’,” it said.

Alternatives

Unlike the HBA, Siva did not think Malaysia would experience a subprime crisis at the levels faced by the US in the mid-2000s, expressing confidence that the government would have learnt from the superpower’s mistakes.

However, he felt the government would do better to brainstorm for other ideas with stakeholders to help Malaysians afford their own homes than proceed with this latest plan.

He suggested the government implement other forms of financial assistance to complement the current system rather than allow developers to provide loans to buyers.

“Rather we should relax our lending laws a bit. Banks may consider ways to become less stringent.

“We need to help first-time buyers, young couples and the lower, middle class maybe by offering high 100 per cent loans instead of 80 per cent or maybe have longer repayments,” he said.

Another consideration was for the government to revive the Developer Interest Bearing Scheme (DIBS) abolished in 2014 due to excessive property speculation and enforce stringent regulation this time around.

“It didn’t work last time because it wasn’t properly regulated. If they regulate it this time, it will really help first-time buyers,” Siva said.

Yesterday, the Urban Wellbeing, Housing and Local Government Ministry announced the introduction of an initiative that enables property developers to give out loans to buyers at an interest rate of between 12 and 18 per cent.

Its Minister Tan Sri Noh Omar said that the move is intended to assist Malaysians who are unable to get a full housing loan from banks or those who may only be given a partial housing loan.

The number of unsold units in both residential and commercial properties also rose by 16 per cent in the first quarter of this year, according to the National Property Information Centre.

The Real Estate and Housing Developers Association (Rehda) Institute chairman Datuk Jeffrey Ng attributed the increase of unsold homes to Bank Negara Malaysia’s strict policies on banks to rein in growing household debt.

The central bank’s annual report for 2013 — the most recent figures available — showed household debt levels overall have increased to 87 per cent, a steady climb from 60 per cent in 2008. Of that figure though, more than 40 per cent of household debt went into loans for property purchases.

Source: TheMalayMailOnline.com