PETALING JAYA, March 9 ― The Real Estate and Housing Developers Association (Rehda) asserted today that the rejection rate for affordable housing loan applications was above 50 per cent, and that strict lending rules were hurting the property market.
The group's president, Datuk Seri FD Iskandar, said Rehda's survey found that loan rejection was the number one obstacle for developers in the second half of 2015, with more than 68 per cent of respondents saying having more than 30 per cent unsold units.
FD Iskandar said most of the unsold units were affordable houses, and that strict mortgage lending conditions were denying aspiring owners their first homes.
“The end financing is really affecting the primary market, especially for affordable housing. The loan rejections rates are really high, more than 50 per cent,” the Rehda president said in the group's 2015 outlook media briefing here.
But despite banks being cautious with lending, Rehda said the take-up rate for new homes was still relatively good.
In the affordable segment, units sold increased in the second half of 2015. Sales of apartments or condominiums, the preferred housing for most young families in the country's major cities, rose by 120 per cent from 779 in the first half to 1,844 in the second.
For the same period, single storey terrace houses sales doubled from 300 to 616 while low cost or flats units sales rose close to 170 from 466 in the first half.
But FD Iskandar said the property market was still in a slowdown. In the second half of 2015, more than 46 per cent of houses in the RM500,000 range, mainly in primary areas in Selangor and Johor, were unsold.
“Gone were the days where people were queueing up when there is a launch. Before 2014 when there is lauch properties would be sold out in just a week.
“Now it can take up to six months to reach the 60 per cent target. So things are not the same as before,” the Rehda president said, adding that this is despite house prices stabilising.
Property prices have more or less remained the same in most states, with developers focusing more on affordable housing launches for 2015.
Bank Negara Malaysia imposed stricter lending rules at the end of 2014 to weed out speculative buying, cool down a bullish property market and rein in the country’s high household debt.
Malaysia’s household debt stood at an alarming 87.9 per cent of GDP according to BNM’s latest figures, the highest in the region.
FD Iskandar conceded today that there is a need to encourage fiscal discipline among consumers, but urged BNM to review its lending rules.
“There must be expansionary policy… if people are not spending, then there can be no growth,” he said.
The Rehda president said most developers remain pessimistic about 2016’s outlook and expect sluggish growth in the property market throughout the year.
Despite rising costs of production, Rehda said property prices are expected to remain the same for 2016 as developers would likely absorb costs to boost sales.