According to PropertyGuru Malaysia’s recent Consumer Sentiment Survey, more Malaysians are now experiencing less difficulty in obtaining home loans however many still remain dissatisfied. They cited interest rates as too high and should be lowered given the present economic challenges faced by the rakyat. According to the survey, 46 percent of people say that interest rates are too high compared to just 31 percent who felt present interest rates charged on home loans are acceptable. Another 23 percent don’t know or prefer not to comment. Home loans remain a vital component for the property eco-system. According to PropertyGuru data, a whopping 91 percent of respondents stated that they’ll need a bank loan to secure a home. Of which, 45 percent would opt for 90 percent financing while 25 percent would go for 70-80 percent financing. Another 18 percent would choose 100 percent financing.
The latest results coincide with findings that the Malaysian property market has reached a more stable position with gradual but sustainable price appreciation compared to the steep rise in the past 2 to 3 years. Given this scenario, Malaysians continue to face challenges in pursuit of home ownership even though they are willing to transact. Obstacles still remain for purchasers especially for first time home buyers who are left with insufficient funds after paying their monthly instalments or meeting upfront costs such as stamp duties, legal fees, moving costs and so on.
“While more loans are being approved, especially due to more joint loan applications, many consumers are declining these loans due to the margin of loan approved and the monthly instalments to be paid. Banks are now approving more applications but, at times, the package offered is not attractive to consumers,” said PropertyGuru Malaysia Country Manager, Sheldon Fernandez. Fernandez added that perhaps one solution is to offer first-time home owners a special interest rate if they bought affordable properties within a specific price range in transit oriented developments (“TOD”). “There is a need to have a clear definition of what is an affordable property in terms of price, size, location and factoring close proximity to the public transportation network. This will not only promote home ownership, but also public transport ridership towards reducing traffic congestion and a more sustainable urban lifestyle,” he added.
43 percent of Malaysians mentioned they have used their Employee Provident Fund (“EPF”) savings to purchase property, either as part of the initial down-payment or to offset their principal home loan amount. This is a 5 percent increase in the sentiment this year compared to 38 percent in H2 2016. Fernandez added that the use of EPF funds, which are essentially retirement savings, provides much insight into the mind-set of consumers. “Generally speaking, dipping into one’s retirement savings to buy a property is a sign of unaffordability in the market. It could also mean that consumers are prioritising home ownership over their retirement years. Others may feel that returns from EPF are not that attractive, hence the money is better invested into a home that would generate capital appreciation and also provide a roof over their heads,” added Fernandez.
Conducted half-yearly since 2009, PropertyGuru’s Consumer Sentiment Survey measures property sentiments and expectations around the property market to enrich decisions by helping consumers, property agents and developers gain a better perspective of the local property market. The H1 2017 survey saw 949 respondents in Malaysia and more than 3,100 respondents across Southeast Asia.
Source: Media Release