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Let Malaysian home buyers borrow more money, Sarawak developers plead

Are Kuching banks too strict with their loans?

[caption id="attachment_59560" align="aligncenter" width="740"]Kuching, capital of Sarawak state in Malaysia. Abang Faizul / Shutterstock.com Kuching, capital of Sarawak state in Malaysia. Abang Faizul / Shutterstock.com[/caption]

In a subdued property market, developers in the Malaysian state of Sarawak are exhorting financial institutions to demonstrate more lenience toward borrowers.

Sim Kiang Chiok, the Kuching advisor for Sarawak Housing and Real Estate Developers' Association (Sheda), lamented the "lack of support" from lenders, presumably leading to a decline in new developments around the state last year, and urged banks to reassess their lending criteria.

“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," Sim suggested. "Banks can also consider longer repayment periods or even extend two generational loans to family housing loans.”

He observed that banks at present have become more stringent in their financing requirements, prioritising applicants based on proven income rather than net income. Projections on future incomes are no longer up for consideration, Sim reported.

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“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," he said.

In a challenging borrowing environment, Sim encouraged developers to break projects into smaller volumes and target higher-income market segments. Otherwise, they can work with the government in providing public housing and affordable homes.

“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.

Global uncertainty brought about by decelerating economies in China and Europe, the tremors of Brexit, and US President-elect Donald Trump's ephemeral policies could blow headwinds on the Sarawak property scene this year.

“The outlook for 2017 will be similar to 2016 – challenging and mixed," Sim said. "Our economic growth forecast is realistic and achievable.”

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