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84% of homebuyers have only ONE (1) outstanding home loan. :)

Posted in Malaysian economy and more

To be honest, this is the first time I have heard of an index called the The Malaysian House Price Index (MHPI). Since this is by Bank Negara, I am quite sure it is published periodically. The latest showed that residential prices across the country are stabilising. Last year, in Q4, MHPI rose only 9.6% and this is lower than one year ago, at 12.2%. This is also the first time that the index fell below 10% since Q3 2011. This is also complemented by the decline in new residential launches.

bnmIf you remembered one of my articles, I spoke about the cases where stronger developers which can delay their project would definitely choose to delay. No point in launching at a price which is too low margin and still risk not selling simply because of the ‘wait and see’ attitude of buyers. With the delay of new launches, Bank Negara has also increased the RPGT as well as higher minimum purchase price for houses by foreigners and the uncertainty surrounding the GST implementation. Do note that GST will at best maintain the property price but based on studies thus far, it is likely to add to the house prices albeit a low single digit percentage.

More importantly, it was also shown that MAJORITY of mortgage buyers, up to 84% borrowers has only ONE outstanding housing loan. This meant that the majority of them are buying for their own occupation or even medium to long term investment. This is considered a good thing because imagine if majority of buyers have two instead of one property? Personally, with this backdrop, it will be tough for certain properties to drop in price. In a test of default of up to 10% of all home owners and a price correction of up to 40 percent, Malaysian banks capital buffer is still sufficient to cover it by over five times.

I think the above is indeed a good news for the property market as a whole. Especially when the secondary market prices continue to lag behind that of primary or new launches meant that there is still a good buffer because not everyone need to buy new properties. They can always take a look at the secondary market and if prices are still considered high, after a while, they will lower their expectations and buy one which after a while would seem okay because imagine even if it is a low medium apartment but everyone who stays there are junior executives? After a while, the prices would definitely go up.

written on 23 June 2014

Next suggested article:   Latest update, Interest Rate, Malaysian economic situation

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10 Comments

  1. S B Lim
    S B Lim

    The statistic shown by Bank Negara ensures the Malaysia’s property market is healthy but I do not think so. Just like inflation is at 3+ % but it feels like food has gone up by 20 to 30%, imported butter 25% to 40% up and many more examples.
    Property prices (Penang) moves only on selected types in good location; I wonder what would be the next push to get the property price to move again; very stagnate currently. Too many measures introduced too fast, just when the ppl are enjoying the paper profit, the authority slapped so many conditions to the property’s transaction. Give us some breathing space.

    June 25, 2014
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  2. racistmalaysian
    racistmalaysian

    84% only have 1 outstanding loan. But the only 1 outstanding loan is huge because property price is too high compare to salary. In the end, nobody buy anything anymore. Business suffer and go bankrupt. People start to lose their job and cannot repay loan. All property goes into auction. Price drop in property. Vicious cycle continue until property bust. This will happen very soon.

    June 27, 2014
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    • I certainly hope not but then again everyone should have their own personal opinion as this would guide the way that they would invest their money. I think you must be having a lot of cash now, waiting for the market to fall. Cheers.

      June 27, 2014
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      • racistmalaysian
        racistmalaysian

        Not sure if market will fall or not. If everyone just happy holding property without rental yield (oversupply and no tenant), I’m sure the price will continue to go up.

        July 1, 2014
  3. Ang
    Ang

    I guess that it is unlikely to fall as Penangites has stronger holding power especially, those buyer who work abroad (SGP, US, UK and so on) and return home buying property, I might be wrong. perhaps, the most challenge party might be developer with their new launching project, there will be less demand from local as the price is too expensive which beyond affordability, nevertheless, for next trend, developer may change their strategy by offering bundle or package like built-in furniture, appliance for their new project, there will be also a new concept to be innovated to attract customer to buy, no matter how, there will be slow down in market or price remains stagnant as the implemented cooling measure by Government already taken into effect, besides, Bank also had already tighten the release of house loan in accordance with new housing cooling measure.

    July 1, 2014
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    • racistmalaysian
      racistmalaysian

      Yeah, Penangites are rich. I heard many people say the same thing too. That’s why don’t do business in Penang because Penang people always save money for rainy days and seldom spend money. I just pity those business owner. Hopefully no business owner own properties. Business in Penang is very bad and continued to get worsen in 2015 after GST implemented (nobody buying anything anymore due household debt and also item getting more expensive). If business owner in Penang holding property, they might be forced to sell it in 2015.

      July 1, 2014
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  4. James
    James

    I guess maybe it might be the typical attitude of Penanglang ^_^. i am a Penangites too. saving is always the priority especially if there is big sale event, you will always can see a big crowd. budget is the main concern, however, when the time talk about buying property or child education for investment and kind future respective, it always sai lang one (means “dare to go” in cantonese), my 2 cents

    February 15, 2015
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    • True James. Quite agree when I look at my Penang friends.

      February 15, 2015
      |Reply

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