A property expert has called on banks to lower their interest rates for housing loans to help first-time buyers get on the property ladder and address the property oversupply situation within the country, reported Free Malaysia Today.
This comes as expensive loans were among the reason why housing demand had remained stagnant, with last year’s overhang at around 30,000 units worth over RM19 billion, said Previndran Singhe, founder of real estate firm Zerin Properties.
“Demand has not picked up,” he noted during a panel session at the International Conference on Greater Kuala Lumpur and Putrajaya on Monday (25 February).
“One of the biggest problems started in 2016, when Bank Negara Malaysia (BNM) introduced responsible lending guidelines. The quality of loans got better, but it was too hard a landing for the developers.”
And with the banks charging loans at five to six percent, rejection rates for housing loans had been “very high”, added Previndran.
“We’re not asking the banks to give interest-free loans, but there has to be a balance where they are responsible towards affordable housing as well.”
Selangor, Johor and Kedah are some of the states facing a housing overhang situation.
He warned of possible housing problems in Kedah as there is no available release mechanism for Bumiputera units.
“If you can’t sell after three years, you can’t sell anymore. You might as well release those units.”
Although the house price index in Malaysia was low, he does not expect it to slow down to a point where it could achieve equilibrium.
“Equilibrium can only be seen if you look at the functions of demand and supply,” explained Previndran. “The demand is there, but the function of demand is also liquidity.”
With this, he reiterated his call for banks to offer cheap loans, adding that this would help lower rejection rates. According to him, BNM could hold discussions with government-linked company banks to reduce interest rates.
He believes that banks would still earn even if rates are lowered to one to two percent.
“We are all in the same ecosystem, but why are only the developers taking the hit?”
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