Greater access to housing fund will not resolve overhang issue

  • Property
  • Friday, 23 Aug 2019

PETALING JAYA: Bank Negara’s efforts to increase the number of applicants seeking assistance from its RM1bil housing fund are not expected to make waves, industry sources say.

The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) said this was “a stop-gap measure”.

“This is just a stop-gap measure and not a solution to a systemic problem, ” said PEPS president Michael Kong.

Kong said there are two issues which have engulfed the country’s housing sector for years, but which remain unresolved. The first is persistently high house prices. The second is a growing overhang worth billions of ringgit.

“There is no catalyst or clear policy directions to steer the market into a better condition aside from increasing funds for financing and easing borrowing, ” he said.

“The government should tackle seriously the overpriced issue and the mismatch of products in the market.

“Having said that, the availability of funds would help reduce the oversupply situation. However, we must stay vigilant against substandard lending, ” Kong said.

Property surveying division chairman Thiruselvam Arumugam of the Royal Institution of Surveyors Malaysia said: “It would help clear the 25%, but the bigger issue is still the 75%.

“The higher salary bracket will help get more eligible purchasers. It will be easier to get loans and there will be a lower rejection rate by the banks, ” Thiruselvam said.

He was referring to the number of overhang units which are priced below RM300,000.

A check with the National Property Information Centre (Napic) Property Overhang Q1 2019 report showed that of the 32,936 unsold completed housing units, commonly known as the overhang, 36.66%, or 12,073 units, are priced RM300,000 and below, valued at RM2.38bil.

According to Napic figures, Perak (4,575 units), Kedah (1,735 units) and the Federal Territory of Kuala Lumpur (1,176 units) have the highest number of unsold completed units priced RM300,000 and below.

On Tuesday, Bank Negara doubled its previous caps on household income and property prices to make its RM1bil Fund for Affordable Homes – announced by the new government in Budget 2019 and which came into effect on Jan 1 this year – more accessible.

Over a six-month period until June 30,2019, the fund received 700 applications, of which 390 have been processed. Of these, 296 have been approved. A total of RM31mil, or 3.1% of the RM1bil fund, has been disbursed, Bank Negara said.

To make it more accessible, beginning Sept 1, the household income eligibility for the Fund for Affordable Homes will be expanded to a maximum of RM4,360 from RM2,300 and the maximum property price doubled to RM300,000 per unit from RM150,000.

At Tuesday’s event, Bank Negara governor Datuk Nor Shamsiah Mohd Yunus made it clear in her speech that it was an additional measure to help first-time house buyers.

Nor Shamsiah made no mention of the country’s residential overhang.

Total overhang of residential properties remains high, rising 30.7% to a new record of 32,936 units valued at RM20bil as at the first quarter of 2019 as opposed to 25,193 units or RM15.7bil in the first quarter of 2018.

For commercial properties, the overhang increased by 25.5% from 4,361 units in the first quarter 2018 to 5,472 units in the first quarter 2019.

Its value jumped 42.9% to RM4.5bil from RM3.2bil in first quarter 2018.

Serviced apartments and small offices home offices or SoHos are categorised as commercial property as they are built on commercial land.

Socio-Economic Research Centre executive director Lee Heng Guie said: “It certainly helps those eligible households to buy affordably priced houses. It also eases the overhang pressure in this price category.”

Metro Homes Realty Bhd executive director See Kok Loong said the raising of the salary and house price caps would “definitely help the bottom 40 group (B40) to buy their own property.

He, however, does not think it would help to reduce the current overhang.

“I believe the overhang units were mainly built during the good times when the prices were on the high side, ” he said.

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