Rehda: Banks should expand their step-up financing and other funding options to improve homeownership

 By Sharen Kaur - Published in NST Property, December 16, 2021 

sharen@nst.com.my

End-financing is still a major issue in homeownership, according to the Real Estate and Housing Developers' Association Malaysia (Rehda).

According to the Rehda Property Industry Survey first half (H1) 2021, 88 per cent of respondents reported end-financing issues in H1 2021.

The top three factors were ineligibility due to buyer income, a lower financing margin, and insufficient financial documentation.

Rehda and the Rehda Institute hope that banks will expand their step-up financing and other alternative funding options to improve Malaysian homeownership.

"As the economy is recovering, we also recognised that the Covid-19 has impacted people differently especially in terms of their access to financing. Most financial institutions are still very risk-averse and too stringent in their assessment criteria to the detriment of prospective house buyers, looking for a home," Rehda president Datuk Soam Heng Choon said in a joint press conference today.

Rehda and the Rehda Institute are hoping that the government will extend the Home Ownership Campaign (HOC), which ends this month, to help with property sales and marketing.

Due to the soft market sentiment and pressure from external market forces, sales and marketing activities are facing a number of challenges.

Datuk NK Tong, deputy president of Rehda Malaysia, said an extension of the Home Ownership Campaign would allow prospective home buyers to purchase a home as their jobs and income improved over time. File Photo

Datuk NK Tong, deputy president of Rehda Malaysia, said an extension of the HOC would be beneficial because it would allow prospective home buyers to purchase a home as their jobs and income improved over time.

"The rakyat looking at their first home or home upgraders that are employed in certain sectors and industries that are still heavily affected by the pandemic, for example from airlines, tourism industries, their hopes, and dreams will vanish due to their inability to get a loan.

"Hence, those whose income was still affected due to the pandemic such as the underemployed and unemployed, as well as those whose income has reduced and those working in the gig economy due to lack of proper documentation, find it challenging to obtain a loan.

"The above could be due to the financial institution's risk committee imposing more stringent valuation on new property launched and also the secondary sub-sale market," he said.

Tong also said that Rehda Institute will investigate developing a Digital Marketing Transformation Initiative (DMTI), which is a digital marketing certification programme for 2022, in collaboration with relevant universities and other partners to assist property developers and the sales and marketing ecosystem in their transition to digitalisation.

This will be implemented in response to a preliminary finding from Rehda Institute's Industrial Marketing and Sales Survey last month, in which 49 per cent of respondents said the impact of digital marketing spending and digitalisation was found to be significant.

Twenty-eight percent of respondents said the impact was somewhat impactful, 18 per cent said it was most impactful, and four per cent and one per cent said it was less impactful and least impactful, respectively.

Tong said the findings came about after one of the current issues faced in marketing and sales of properties in Malaysia was highlighted.

"There is still very slow and lack of digital technology adoption from property developers in Malaysia, particularly the medium-sized to smaller developers. During the lockdown period and due to Covid-19, the developers are unable to embrace digitalisation especially relating to marketing and sales activities, particularly medium-sized to smaller property developers outside Klang Valley. This has had an impact on homeownership in those geographical areas," he said.