Sim Kiang Chiok
KUCHING: The past year had been a mixed and challenging one for Sarawak due to various factors such as the slow economic growth in Europe, the Brexit and lower growth in China.
At the same time, uncertainties in the US due to the change of president and low prices for petroleum as well as other commodity prices did not help much.
In this regard, Sarawak Housing and Real Estate Developers Association (Sheda) Kuching branch advisor Sim Kiang Chiok noted that the Malaysian economy was still resilient in view of these external challenges, with anticipated growth of four to five per cent of GDP for 2016, and projected growth of four to 4.5 per cent for this year.
“In Sarawak, we can expect that the economic outlook is similar to the country’s forecast, which is good and supportive towards overall growth.
“In property, the outlook for private developers in Sarawak is challenging due to factors such as the lack of support from financial institutions, and also government’s policy and programmes. The Napic record of property transaction and value has dropped up to the third quarter of 2016 and new developments have also dropped in Sarawak,” he said, listing sellers, buyers and the bankers as the players in the property industry.
“However banks are being or choosing to be very strict in end-financing of properties this year, which affects the sales of houses. These are the challenges that private developers are facing because the financial institutions have strict lending guidelines where lending from net income has moved to become even stricter with lending based on proven income, and no projection on future income is allowed for consideration under the lending guidelines.”
Sim proposed for the lending for properties to be considered as savings instead of spending, adding that this was purely because in Malaysia with the protections already in place, properties would appreciate instead of depreciate like other assets such as machinery and other disposable goods.
“Banks should consider lending on staggered repayment where for example, the repayment is low throughout the first five years, and subsequent repayment to be on an ascending scale. Banks can also consider longer repayment periods or even extend two generational loans to family housing loans,” he suggested.
“We hope that the banks would take note of the slowdown and adjust their lending guidelines so that the property industry could grow and contribute to the country’s economy and prosperity.
“The government’s policy of building affordable houses through federal authorities such as PR1MA and National Housing Department will increase the supply of houses below RM400,000 (per unit); thus causing some overlaps of houses supplied by private developers at between RM300,000 and RM400,000,” he said.
Sim called on the developers to adjust their pricing strategies and products through designs and types of houses that they built, and the location of their development plans, while private developers should consider supplying to higher income group and selling at a lesser volume.
“Developers also can consider taking the role of contractors to the government agencies and authorities that are building affordable and public housing.
“On a positive note, the state government has changed the planning guidelines to increase the density of landed houses from eight units an acre to 10 units, strata title density from 24 units to 30 units per acre.
“This will reduce the cost of building houses on the land component upon existing land owned by developers. However, landowners now can command higher prices for their land as more units can be built based on the new guidelines.
“The outlook for 2017 will be similar to 2016 – challenging and mixed. Our economic growth forecast is realistic and achievable,” Sim said.