The tougher mortgage rules introduced by Bank Negara Malaysia will continue to negatively affect first-time home buyers, according to Datuk Othman Omar, Chief Executive Officer of Oxley Holdings (M) Sdn Bhd (OHSB).
During his term as the General Manager at Selangor State Development Corp (PKNS), he pointed out that 70 percent of the housing loan applications of this group are rejected as eligibility is now based on net income rather than gross income previously.
Unless the central bank changes its rules on first-timers, this trend is expected to continue throughout 2014, Othman predicted
“Previously, first-time house buyers qualify for loans just above the border but now they do not qualify due to the loan-to-value ratio and the new credit assessment guidelines.”
“The ruling punishes the first-time home buyers seeking affordable homes more compared to the high-end property buyers,” he noted.
As a result, property purchases are falling and developers are launching fewer products locally due to BNM’s existing measures, coupled with the Improvement Service Fund (ISF) in Selangor.
Earlier this year, Petaling Jaya Mayor Datin Paduka Alinah Ahmad, stated that developers with projects in the city are required to contribute to the fund to lessen the impact of their new projects.
ISF will be used by the Petaling Jaya City Council (MBPJ) to upgrade basic amenities such as roads so that there will be less traffic at these locations.
To cope with these measures, many investors are looking at overseas real estate, especially in Australia and the United Kingdom, said Othman.
“For properties in London, getting housing loans is still the main challenge for Malaysian investors, however, several local banks like Malayan Banking Bhd (Maybank) and CIMB Bank Bhd are offering housing loans and we see low rejection rate as most of these investors are high-net-worth individuals with good credit records.”
In particular, London’s Royal Wharf project has seen strong interest from Malaysians who are keen on waterfront properties. The development consists of 3,400 apartments and townhouses, office space, retail as well as F&B spaces.
Farah Wahida, Editor of PropertyGuru, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my
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