Glomac: High housing loan rejection rate worrying

KUALA LUMPUR: Glomac Bhd is appealing to Bank Negara Malaysia, the central bank, to be more flexible in providing end financing for prospective home buyers, as the rejection rate for home loans in the industry for the first six months this year is more than 50%, which is a worrying trend.

Group managing director and CEO Datuk Seri Fateh Iskandar Mohamed Mansor said yesterday end financing is the biggest issue and a major concern now.
“When you have a high rejection rate, the level of confidence goes down. When developers launch (properties) and don’t see the take-up, they will pull back launches. The demand is still there but with no supply, like it or not, property prices will go up,” he told a press conference after Glomac’s AGM here.
Fateh said demand for affordable homes is there, especially in the city centre and in Greater KL, where 67% of the population are below 30 years old and are property buyers.
He said home buyers would pay 10% initially and sign the sale and purchase agreement before applying for a loan.

“With the higher loan rejection rate, this is where after three to four months, they cannot secure a loan to complete the sale of the property.
This is where we’re worried. Then another person comes and it’s the same problem. We already took it as sales three to four months ago but because the bank loan has been rejected, we categorise that as negative sales,” said Fateh.
He is calling for some flexibility to be given, especially to first-time home buyers and for properties priced below RM500,000. This includes higher acceptance of loans, even a full loan.
“Usually first time house buyers and those looking for properties below RM500,000 are 30 years old and below and they can work until 65 and have 35 years to pay.”
He said the property and real estate market has taken a beating since 2013 because of cooling measures and higher real property gains tax.
“We see that the market will be challenging but we hope some good news will come from Budget 2016. At least certain recommendations made by the industry either through Rehda or through individual companies will be taken into account.”
Meanwhile, Glomac expects new sales for the financial year ending April 30, 2016 (FY16) to improve from RM506 million in FY15, driven by new launches of RM802 million.
Planned launches for FY16 include Saujana KLIA, Saujana Jaya in Kulaijaya Johor, Lakeside Residences, Bandar Saujana Utama, Saujana Utama 5, Sri Saujana in Johor, Suria Residen in Cheras and Centro V.
Glomac also expects moderate profit growth in FY16, underpinned by unbilled sales of RM796 million as at April 2015.
Fateh said the group has a strategic focus on landed residential and affordable townships. It has a future gross development value (GDV) of RM8 billion, of which 75% are from townships.
“Out of the RM802 million GDV in FY16, RM550 million is for townships and affordable homes. This is what the market wants,” Fateh said, adding that for its RM506 million sales registered in FY15, about RM400 million came from affordable homes or houses priced RM500,000 and below.
Moving forward, he said the industrialised building system (IBS) is something that it should be aiming for.
IBS is a construction system which uses industrial production techniques either in the production of components or assembly of buildings, or both.
“IBS will help us to lessen the number of foreign workers. However, at the moment, IBS is still a little more expensive than conventional construction. There must be economies of scale for IBS to be competitive.”
He said there are not enough IBS jobs around and if the government wants to move into this, certain incentives, such as tax rebates, must be given.