The latest round of property cooling measures will likely affect Malaysia’s loans growth, especially banks with exposure to Singapore’s retail market, according to The Borneo Post.
Although the new rule will not significantly affect total loans of local banks, players like Malayan Banking Bhd (Maybank), RHB Capital Bhd (RHB Capital) and CIMB Group Holdings Bhd (CIMB) — all of which have exposure in Singapore – will see a pullback on mortgage growth.
“Altogether, there will be a double-whammy effect on both demand and prices in the Singapore property market, hence the impact on credit growth,” commented the research team at Affin Investment Bank Bhd (Affin IB).
Furthermore, Affin Investment noted that industry observers are expecting a sharp decline in property prices and sales, as both buyers and developers would adopt a “wait-and-see” attitude.
“The market is expected to stay soft for at least the next six months, with demand expected to gradually recover as developers would be adjusting prices down or enticing buyers by absorbing the additional buyer’s stamp duty,” it said.
In terms of loan growth impact on Malaysian banks, Affin IB said the longer-term downside risk for these banks would depend on whether Singapore can maintain its status as a major property investment destination, given the rivalry from Hong Kong and China.
“Upside risk could be supported by the diversion of activity to the commercial and industrial segments, which are not affected by the stamp duty hike.”
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