Penang Real Estate | Penang Property | Penang Properties: Land For Sale (ML2)

Penang Real Estate | Penang Property | Penang Properties: Land For Sale (ML2)

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Penang Real Estate | Penang Property | Penang Properties: Vantage Point (SO1)

Penang Real Estate | Penang Property | Penang Properties: Vantage Point (SO1)

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Penang Real Estate | Penang Property | Penang Properties: Reflections Condominium (C2)

Penang Real Estate | Penang Property | Penang Properties: Reflections Condominium (C2)

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Penang Real Estate | Penang Property | Penang Properties: Desa Bistari - The Price is Right (A1)

Penang Real Estate | Penang Property | Penang Properties: Desa Bistari - The Price is Right (A1)

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Penang Real Estate | Penang Property | Penang Properties: Bungalows For Sale (B1)

Penang Real Estate | Penang Property | Penang Properties: Bungalows For Sale (B1)

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Penang Real Estate | Penang Property | Penang Properties: Zan Pavillion

Penang Real Estate | Penang Property | Penang Properties: Zan Pavillion

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Actual sale of residential properties declining

PETALING JAYA: The residential property market may be cooling down in terms of actual sales due to credit-tightening measures by banks, according to real estate consultants and Bank Negara data.

Bank Negara's website showed loan approvals' percentage for residential properties in the country declined to 46.8% in the first half of this year from 50.1% during the same period in 2011.

The number of loans applied for purchases of residential properties increased by 2.9% year-on-year in the first half of this year to RM96.7bil.

However, the number of residential property loans approved during the six-month period declined to RM45.26bil from RM47bil in the same period in 2011.

It is also worth noting that the loan approval percentage for non-residential properties was stable at 52.3% in the first half of this year, compared with 52.4% during the same period in 2011.

The number of loans applied (RM50.35bil) and approved (RM26.35bil) for purchases of non-residential properties was also stable in the first half of this year.

CB Richard Ellis (Malaysia) Sdn Bhd executive director Paul Khong said if the housing loan approval rate continued to decline, it will affect residential property prices.

“In order to conclude transactions, residential property sellers may now need to realistically adjust their selling prices as many of the buyers cannot get their loan applications approved,” he said.

KGV International Property Consultants director Anthony Chua said although the demand for residential properties continued to be high, the credit-tightening measures by banks had resulted in the market “cooling somewhat”.

“We are still monitoring the situation. There is less transactional activity in the market this year for both new property launches and the secondary market compared with last year,” said Chua.

Property consultancy CB Richard Ellis (M) Sdn Bhd had, in its recent report on the Kuala Lumpur residential market for the second quarter of 2012, also noted that there was a significant decline in the loan approval percentage this year.

“The loan approval rate was as high as 60.5% during the first five months of 2008, and has declined steadily since,” said the report.

The CBRE report said that the lower rate of loan approvals this year could be attributed to the implementation of new lending guidelines by Bank Negara.

Effective this year, banks have started using net income instead of gross income to calculate the debt service ratio for loans.

“Anecdotal evidence from real estate agents suggests that transactional activity has also declined as a result.”

The property consultancy also pointed out that despite the lower loan approval rates, buyer interest in new property launches, typically of smaller housing units in secondary locations, during the second quarter remained strong with developers continuing to offer attractive incentives to the purchasers such as the developer interest bearing scheme (DIBS), early bird discounts, free built-in cabinets and free legal fees.

“We expect 2012 to be a period of stabilisation especially within the luxury residential market, with transactional activity depressed by uncertain economic conditions and the reduction in loan approval percentage, which remains well below 50%.”

The CBRE report also said speculative property purchases were expected to be reduced for the rest of this year, as a result of tighter lending conditions, uncertain economic outlook, and concerns about the outcome of the upcoming general election.

Meanwhile, another property consultant said the tighter lending conditions had taken a visible toll on the secondary residential property market.

“Newly-launched properties are selling well thanks to better financing access, especially with the DIBS offered by many property developers.”

The consultant said slower sales activities in the secondary residential property market had resulted in innovative offers from marketing agents.

“This includes transactions where buyers sign the sales and purchase agreement but take the bank loans only a year or twolater. In effect, the buyers lock in the unit price now (perhaps in anticipation of further increases in market prices) and defer payment until much later. This works just like an informal DIBS,” he said.

In a recent report, Kenanga Research also said based on its channel checks, the secondary market appeared to be very weak and prices of secondary and primary products have diverged further.

The research unit opined that buyers were more focussed on new launches due to financing and promotional schemes.

“From a bank's perspective, we think there is a preference to lend to the primary market as it means better asset quality whilst banks can get all-in' deals with developers (for example, end-financing to bridging to land financing) to ensure a more balanced systems loans growth.”

Kenanga Research also opined that as a result, property developers can continue to grab greater market share and chalk-up high sales, although it expected Malaysia's overall residential transaction value growth to be relatively unexciting at 5% year-on-year.

It was noted that despite the tighter lending criteria, Malaysia's total residential transaction values have remained stable in the first quarter of this year.

It said buying interest remained strong, due to residential property buyers hedging against inflation and the lack of alternative investments, but this will be reigned in by more prudent lending criteria and the banking system's fear of real-estate tightening measures such as higher real property gains tax. - The Star

Penang Real Estate | Penang Property | Penang Properties: Shop For Rent (S1)

Penang Real Estate | Penang Property | Penang Properties: Shop For Rent (S1)

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Penang Real Estate | Penang Property | Penang Properties: Zan Pavillion

Penang Real Estate | Penang Property | Penang Properties: Zan Pavillion

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Time to impose stronger policies to weed out property speculation

WE have heard all the reasons for the increase in property prices. Land is getting expensive, building materials are costlier and interest rates are low and so on.

Now, Syarikat Perumahan Negara Bhd managing director Datuk Dr Kamarul Rashdan Salleh has said the buying of homes by non-Malaysians was pushing up the price of homes.

There is truth to that but we should not be putting the blame solely on foreigners for the hike in property prices.

Rich foreigners, like their Malaysian peers, will buy luxurious condominiums, sprawling bungalows and expansive semi-detach homes. Those with money will know that property prices in the hot urban areas have surged in recent years and over the long-term, they will stand to make a pretty decent capital return from their investment.

There had been stories of people buying multiple units of homes when they were launched.

Those at the back of the queue would just have to find a house somewhere else after being told the units on sale had all been sold. Urban migration means that this issue will get amplified in the years ahead.

All of this has led to frustration as the dream of owning a home is increasingly escaping most of the low and middle-income segments. Not helping matters is the crawling pace in the construction of affordable homes.

There are homes to be bought in places most of us now will be shaking our heads with disbelief if told that is where we have to live given the price of homes these days.

But why blame foreigners for pushing up home prices and forcing more Malaysians to live in the fringes of big cities when policies do nothing to stop that from happening? Do the number of expatriates and work permit holders mirror the purchases done by foreigners? Or are foreigners buying homes as an investment?

It comes as little surprise that foreigners and Malaysians share the same hurdles when buying a home. Yes, there is a floor price for houses foreigners can buy and the price of most new luxurious homes foreigners might want to buy are above that limit anyway.

If policy makers are serious about at least putting some brakes on foreign money flowing into homes in Malaysia, they should just see what other countries are doing. Singapore has a 10% additional stamp duty on foreigners buying homes and only allows a small number of foreigners to buy landed properties.

Doing that in Malaysia will have its repercussions though. Imagine what will happen to demand for the new upmarket homes being built in southern Johor, especially Iskandar Malaysia, where the focus is on building homes for Singaporeans and other foreigners.

An exemption can be granted for certain projects but on the whole, policies should be strengthened to weed out excessive speculation in home buying.

The real property gains tax should be punishing and maybe there should be a limit to the number of houses a person, Malaysian or foreigner, can buy at a new launch to just one.

Acting business editor (features) Jagdev Singh Sidhu wonders why people can't buy homes in established neighbourhoods instead of paying the same price for a new home so far away from the city centre.