Cenbet: Soaring prices behind loan woes in housing industry

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KUALA LUMPUR: The government should rein in soaring property prices, the primary reason for loan woes in the industry, said the Centre for a Better Tomorrow (Cenber) in a statement.

Among others, added the think tank, the government should look into construction material and land holding costs. “This is the result of red tape,” it charged.

Elsewhere, said Cenbet, the government should relook Bank Negara’s credit policy, in particular, for first time house-buyers. “The idea should be to make it more flexible to fit the present economic climate.”

The think tank was commenting on the Urban Wellbeing, Housing and Local Government Ministry not spelling out the criteria for issuing moneylending licences to developers. “It’s important to allay the public’s fears on developers providing loans for house buyers,” it said.

The statement noted the Cabinet asked the Ministry on Wednesday “to review and improve the policy on allowing developers to provide.loans”.

Many in the Cabinet, including the Minister of Finance II, rejected the idea of developers providing loans. “These do not bode well for good governance,” said the statement.

While developers had long been able to apply for moneylending licences, the fallout, was poorly managed, it continued .

The think tank urged the Ministry to spell out the criteria for developers to get moneylenders licences. “It must explain why developers can give loans to house buyers, at higher interest, when they fail to secure financing from banks at lower rates,” it said.

It feels that developers with moneylending licences will complicate Bank Negara’s regulation of the market.

For example, the Moneylenders Act lacks the regulatory framework to monitor and enforce best practices, unlike the banking industry.

Another major concern was the further ballooning of Malaysians’ household debts, already among the highest in Asia.

Malaysia’s household debt-to-GDP ratio was at 89.1 per cent last year.

Allowing developers to charge interest of up to 18 per cent per annum may further increase household debts, warned the statement.