by Sharina Ahmad
THE additional measures to assist borrowers affected by the Covid-19 outbreak announced by Bank Negara Malaysia’s (BNM) on March 24, which will further support lending activities to the property sector, are expected to provide an impetus to the sector.
Professor of economics at Sunway University Business School Dr Yeah Kim Leng said the increase in bank financing will be a boon to the property market.
“By giving banks the flexibility to determine their exposure to the broad property sector, those with strong sector risk assessment capabilities and good knowledge of their customers, namely, the individual borrowers, construction companies and property developers, can now raise increase their property loan portfolio,” said Yeah.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the move would certainly create an interest to the property sector.
“It's obviously a buyers’ market in the residential properties space. Therefore, those with deep pockets could seek financing to purchase bigger properties in strategic locations. But for the masses, affordability will continue to be the main issue,” he told FocusM.
In the current circumstances, Mohd Afzanizam said, first-time house buyers would also become more cautious in their search for new properties. “They would likely adopt a wait-and-see attitude as the event (Covid-19 outbreak) continues to unfold.”
An independent property blog founder, Charles Tan, said thus far BNM has been ahead of the curve and has implemented many pre-emptive measures as soon as it had data to support the probability of what may be happening.
“The overnight policy rate (OPR) cuts (on two occasions so far this year) have demonstrated this, followed by the recent statutory reserve requirement (SRR) cut as well (for banking institutions).
“This gives banks more funds and the market with more liquidity. The basic idea for the move by BNM is to give businesses ‘breathing space’. Let’s understand that when businesses fail, they will have to let go of people and leave them without salaries,” Tan told FocusM.
Bear in mind that the current situation is a tough one for all businesses, he asserted.
“We are not talking about some inefficient companies which we should allow to fail. Additionally, once a business fails, for a new one to be set up and start running and hiring people again will take time and this will delay the recovery even further.”
REI Group CEO Dr Daniele Gambero notes that the property sector is no longer restricted by any loan capping.
“This, in other words, means that if the borrower is bankable and his income allows for 100% financing it will no longer be a dream, in my personal understanding; no more 70% limit after the second property.
“If we add in the current market situation and, even more importantly, the property market sentiment, well this U-turn will definitely help to see some good movements and sales shall start moving soon,” said Gambero. - March 25, 2020