Banks are lending MORE to the property market; 8 percent higher than 2015

Fewer people were able to borrow from banks for property purchase, true? In brief, it’s either loan approvals are down or loan rejections are rising. Perhaps quite true since total number of property transactions are down. Property transactions and price, both dropping. (Jan – Sept 2016)  Overall, the total loans to the property market is still increasing, albeit slower growth.  Lending from the financial institutions to the domestic property market increased by 8 percent in 2016 versus 2015. Full article in NST here. Total exposure is now RM793.9 billion.  This is 26.7 percent of the total financial systems assets as at end 2016. This is as per Bank Negara Malaysia (BNM)’s Financial Stability and Payment Report 2016 released today. About 90 percent of the loans were given by banks in the form of end-financing for the purchase of residential and non-residential properties.
Some stats were also included in the report. BNM estimated that a household with a median income of RM4,585 (without any other debt obligations or savings) could only afford a house priced about RM260,000.  This meant that it’s tough for them to afford a home because the national average house price is RM334,736 as at end-September 2016. (NOTE: There are still cheaper secondary properties around plus the usual affordable housing schemes) The transacted house prices during the same period was between RM435,000 and RM1.1 million in urban centres. A total 456,197 housing loan applications were received in 2016 and 61 percent were for the purchase of houses priced below RM500,000 of which 50 percent out of this were for houses priced below RM250,000. Rejection rate is 23.6 percent for 2016 versus the 26.1 percent for 2012 – 2015 period.
Rejection rate is thus becoming better; more applications are approved when compared to the year before. This is better and perhaps show that people have started to go for more affordable properties based on their household incomes. Actually, lowering one’s expectations would enable more to purchase their homes. Perhaps not the ‘dream’ property for their first home. Even though my first home was a RM123k small 700 sq ft secondary apartment in a secondary area, I loved it and stayed there for 4 years before I finally was able to upgrade. Unfortunately, majority of us were not born with a silver / gold spoon. Fortunately however is that we can work hard,rise up the career ladder and learn to invest so that our lives can become better. Ready to buy / rent in 2017? This is what readers have to say. 85% will still buy a property, as per readers  Happy deciding.
written on 25 March 2017
Next suggested article:  Using ‘bad debts’ to buy ‘good debts?’


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