PETALING JAYA: End financing issues, particularly the lower amount of money banks are willing to lend home buyers, is the main cause of unsold housing units, a Real Estate Housing Developers’ Association Malaysia (Rehda) survey found.
The Rehda Property Industry Survey for the first half of 2017 also cited lower demand for properties and unreleased Bumiputera quota units as contributing factors.
Speaking on the survey findings, which saw input from 153 developers, Rehda president Fateh Iskandar Mohamed Mansor said that in the first half of 2017, some 72% of properties remained unsold after completion over the last three years.
He added that 41% of the respondents’ unsold units were priced under RM500,000, mostly in Johor, Kedah, Melaka, Pahang, Perlis and Perak.
According to a recent report in The Star, figures from the National Property Information Centre (Napic) indicate there are some RM10.08 billion worth of unsold residential units in Malaysia in the first quarter of 2017.
The figure excludes serviced apartments which have been classified as commercial properties since 2015.
“The main problem is the margin of finance. The banks say they give out loans, but it is the margin of financing that is key,” said Fateh.
He said buyers would usually be able to afford the 10% down payment and apply for a bank loan to cover the remaining 90% of the price, but many applicants now can only get 70% to 75% loan.
“So when a house buyer’s application for a 90% loan gets rejected, we consider this a loan rejection. The house buyer would usually then go to other banks to get a 90% loan.
“This will take time. In the past, housing loans could be approved and disbursed within 45 days, but it now takes a longer time for bank loans to be approved and disbursed.”
Recently, Bank Negara Malaysia said access to financing was not the problem and the loan approval rate for houses in the first five months of 2017 stood at 74% accounting for some RM40 billion in housing loans.
Other factors affecting financing issues include a buyer’s insufficient income, credit history and quotas for low cost and affordable housing.
The survey also found that 40% of the developers were greatly affected by the current economic situation, resulting in the rescheduling of launches and planned projects, reducing the scale of launches and even delaying projects due to poor demand.
In fact, Fateh said, for the first half of the year, a total of 21,899 units were planned to be launched but only 9,089 units were actually offered.
“In terms of operations, many developers have frozen new recruitment of staff and cut down on benefits or perks like bonuses.
“For developers who have seen an increase in business, comprising half of our respondents, they have also seen an increase in costs of 10%,” he said.
The main costs were for land, material and labour as well as compliance, like levies and land conversion premiums.
Fateh said that for Budget 2018, Rehda would release its wish list soon.
It would mainly address the issues of end-financing and compliance costs, which ended up being passed down to house buyers, he added.