First of all, the household debt to gross domestic product has risen marginally to 87.9% compared to 86.8% a year earlier. Actually, in percentage, it’s getting worst! However, look one level deeper and we can heave a sigh of relief because 80% of all new loans had a debt service ratio (DSR) of less than 60%. In other words, the recent transactions were mostly by people with more cash and not those who borrows 90% loan. Two words would be ‘higher quality.’ It’s definitely not just any Tom, Dick and Harry.
In fact the household debt has gone done to 9.9% from 11.7% one year ago. This is reflected by the number of transactions for properties which is still down compared to 2012. I think one major reason is what every agent and developer has been telling you, the rejection of loan applications are high. In other words, banks are still very frightened to simply lend because of the perception that affordability has become a luxury. Besides that, Bank Negara Malaysia is also breathing down their necks too.
Another piece of good news would be that 92% of the outstanding for credit card balance being current. Imagine if the statistics tells you that majority of all the credit card balances are old debts!? For the lower earning category of RM3,000 and below, their share of loans with DSR of less than 60% was very high, at 91.8 percent. Yes, this meant that they are buying within their means. I think it is definitely not new properties though. Secondary may be much more realistic in terms of pricing currently. On an overall basis, the ratio of household financial asset to debt is still more than two times.
If you have been following the statistics closely, all these continued to show a positive sign that bubble is a little far away. Today, the developers are struggling to sell their properties as soon as people felt that their pricing is on the high side. Without these continuous and high increase in prices, the pressure on property bubble has been lowered tremendously. There’s a property fair in One Utama currently. Drop by, ask a few of the developers how long have they been selling the same project. Sales are definitely slower these days. Thus, only those with deeper pockets could buy and this contributed continuously to the slightly healthier growth in terms of household debts in 2014. I believe this will continue in 2015, at least until after everyone understood that GST should not be a main reason or worry whether should they or should they not buy.
written on 13 Mar 2015
Next suggested article:  100,000 new units vs 140,000 new household formation. Prices up? Do not agree.


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