PETALING JAYA, SEP 12:
Property developers have come out with some hard facts that suggest that the sector is cooling off.
According to the first half 2014 Property Industry Survey by the Real Estate and Housing Developers' Association Malaysia (Rehda), properties in the affordable housing price range below RM1mil have been facing a tough sell largely because of homebuyers' difficulty in getting financing and a glut of unreleased bumiputra lots.
Also, some 31% of properties in the RM500,001 to RM1mil range were still left unsold after completion in the past three years. These were largely in hot property markets like Selangor and Johor.
Properties in the price range of RM250,000 to RM500,000 also faced the same dilemma, with 34% of the completed units unsold. These were located mainly in Perak and Pahang.
Close to 90% of the respondents experienced a slowdown in property sales due to cooling measures announced in Budget 2014 and over 80% of the respondents of the survey held a "neutral" to "pessimistic" outlook for the first half of 2015.
Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor said demand for property was intact but with the Government's cooling measures introduced a year ago, developers were finding it difficult to successfully sell in the affordable housing segment.
"A property is a person's biggest wealth creation asset, yet they can't seem to own one," he noted. He suggested that the Government reinstated the developers' interest bearing scheme for first-time house buyers to allow the working class to own a roof over their head.
The survey found that while 84% of developers were able to get bridging financing for their projects, 53% of their buyers faced challenges getting financing to buy the properties. Among the loan rejections from financial institutions, the highest rate was among home buyers in the RM200,001 to RM500,000 property range.
"We can build but it is a different story for those with the capacity to buy the homes," he said, adding that the 70% loan-to-value ratio was beyond the capability of many home buyers too.
Hence, Fateh Iskandar appealed to the banks to revisit the guidelines for responsible lending to property buyers.
He further pointed out that for the first time in the recent history of the property sector, less than 50% of units launched were sold in a half-year period.
Of the total 10,189 units launched in the first half of this year, only 49% were taken up. Of that figure, 41% of the launches were in the RM200,001 to RM500,000 price range, mainly located in Johor and Pahang, while 31% were in the range of RM500,001 to RM1mil. This trend was similar to the the second half 2013 period.
At the same time, property developers have had to struggle with the lack of demand for bumiputra lots in locations where bumiputras do not traditionally settle in.
Fateh Iskandar said the authorities' call to raise the bumiputra quota in property developments up to 70% would only further squeeze developers who would not be able to sell the lots despite their best efforts in marketing the projects to the targeted buyers.
"Demographics and locality can't be pushed. If you were to ask a non-bumiputra to buy a property in Kampung Datuk Keramat or a bumiputra to buy a house in Jinjang, for example, it's going to be difficult," he said. "Yet these quotas are still being put in place everywhere."
Fateh said developers were supportive of the original quota of 30% bumiputra lots but felt a higher quota would not serve certain locations.
Rehda has suggested for the automatic release of the unsold bumiputra lots in tranches - 10% release every six months from the launch - but this notion has not been taken up by the federal nor state authorities.
Source: The Star Online