Tuesday 27 September 2011

Low-cost housing being abused, say developers

This is reported in the Malaysian Insider.


September 26, 2011


KUALA LUMPUR, Sept 26 — Developers said today low cost housing mandated by state governments are missing their intended objective and becoming ghetto areas for immigrant workers, who form up to 15 per cent of Malaysia’s 28 million population.
This comes as pressure has been increasing on developers to build more affordable homes for the Malaysian public. Putrajaya also recently launched two new property schemes for young executives earning up to RM6,000 a month in urban areas, in a bid to stave off effects of rising property prices. 
“Low-cost houses are being sold as rental properties and are full of Bangladeshis,” said Che King Tow, Real Estate and Housing Developers Association (Rehda) council member at a briefing to the media today.
“The low-cost housing schemes are not market-driven but politically-driven.”
Rehda president Datuk Seri Michael Yam later told The Malaysian Insider that the wider society was cross-subsidising low-cost houses as they are sold for RM42,000 but cost between  RM60,000 and RM70,000 in construction alone and without factoring in the land costs.
The cross-subsidy is borne by those who purchase conventionally-priced houses.
“There is a concern that the cross-subsidy has gone to the wrong people,” he said. “If you think about it, the rental income is quite good.”
Che added that it would be better for a more market-driven approach to be taken rather than one imposed by the state.
He said that Rehda is proposing that a national database be established to register those interested in buying affordable houses, which he said would allow developers to plan accordingly and prevent abuse by people trying to purchase such properties for rental income.
Yam said that to make housing more affordable, authorities should allow densities to rise as it would amortise the cost of the land among a larger number of purchasers.
He added that the states should intervene less in the property sector and allow developers to be as efficient as possible, saying this would help lower development costs.
Putrajaya also has a unit, Syarikat Perumahan Negara Berhad (SPNB), which is now building 14,470 housing units of various types across the country.
The Najib administration has also launched the My First Home programme, proposed in Budget 2011, that targets homes within the RM100,000 and RM220,000 price range nationwide.
Under the scheme, young workers earning below RM3,000 monthly can procure 100 per cent financing with a 30-year repayment period from selected financial institutions, to buy such homes.
Prime Minister Datuk Seri Najib Razak kicked off the first phase of the 1 Malaysia Housing Programme (PR1MA) in July, which involves the construction of 42,000 houses on 20 strategic sites. Each unit would be sold between RM150,000 and RM300,000 depending on location and size.
Among developers involved in phase one of PR1MA are Putrajaya Holdings, SP Setia, Tradewinds, Cyberview, Sime Darby Property, MRCB Resources and 1MDB.
The project involves 825.1 acres of land in total.

Friday 23 September 2011

Rise in rates sends prices, sales tumbling

I always wonder whether "raising interest rates" is the best measure to contain a "hot" real estates market.  The news below in Hong Kong is a good read.

By South China Morning Post
Wednesday, 21 September 2011 16:46


HONG KONG: A spate of bad news on the home front, including another rise in interest rates, has sent Hong Kong home prices and deal numbers tumbling.


The latest blow to market confidence came last Friday, Sept 16 when the city's two biggest home lenders, HSBC and Bank of China (Hong Kong), raised their mortgage interest rates.

Despite price discounting in the secondary market of up to 7% by anxious sellers, just 15 flats were sold in the city's 10 biggest estates at the weekend, with zero deals recorded in five of them. The sales were down by more than half from the 33 deals done in the 10 large estates over the previous weekend and compare with an average of nearly 40 deals per weekend in the year's first half.



Just six new flats sold over the weekend of Sept 17-18, the lowest weekend total for the year and down from eight the previous weekend, regional head of property research at Samsung Securities (Asia) Lee Wee Liat said. In the first half of the year an average of 100 new flats were sold each weekend.

The cause of the latest declines was Friday's increase in rates, the fifth for the year, agents said. The higher borrowing costs come on top of uncertainty about the global economic outlook, nervous bidding at recent land auctions, falling stock prices and the release by developers of new projects at prices that are close to, and in some cases lower than, prices in the secondary market.

HSBC increased the interest rate on mortgages based on the Hong Kong interbank offered rate (Hibor) from Hibor plus 1.8%-2.3%, to Hibor plus 2.3%-2.7%. Hibor is the rate banks charge for lending to other local banks.

HSBC also raised its prime-based rates from prime minus 2.7% to prime minus 2.1%-2.4%. The new rates took effect on Monday.

Bank of China (HK) raised its Hibor-based rates to Hibor plus 2.0%-2.5% from Hibor plus 1.8%-2.3%. More local banks are expected to follow the market leaders.

"The new round of mortgage rate hikes initiated by HSBC last Friday dampened secondary-market sentiment," Samsung Securities' Lee said. "Some homeowners lowered their prices, but potential buyers maintained their wait-and-see attitude."

The senior sales director at Hong Kong Property's Whampoa Garden branch, May Chan, said only one flat changed hands on the estate over the weekend, after the owner cut his asking price by 7% from HK$3.8 million (RM1.52 million) to HK$3.58 million.



"Half of the eight appointments we made on behalf of buyers were cancelled over the weekend after the higher mortgage rates were announced. Sales had already begun slowing, but the news of another increase in home loan rates turned the market sentiment from bad to worse," she said.

A sales director at Centaline Property Agency's Tuen Mun and Tin Shui Wai branches, Perry Fong Kai-ming, said home seekers had responded to the latest news by deferring their purchase decisions. Buyers were worried about more increases in lending rates and tighter credit policies, he said.

The five estates with no sales at the weekend were South Horizons, Mei Foo Sun Chuen, Laguna City, Discovery Park and Metro City.

"In some housing estates such as Park Island in Ma Wan and Sunshine City in Ma On Shan, we see transacted prices down 3% to 4% in just one week. Buyers are cautious in the face of the bad news," Ricacorp Properties head of research Patrick Chow Moon-kit said.

According to Centaline Property Agency, the affordability of a 600 square foot flat — as measured by the monthly mortgage payment as a proportion of household income — has deteriorated from 41.8% to 43.8%, based on a Hibor loan of 60% over 20 years.

Nicholas Brooke, chairman of the Professional Property Services Group, said a combination of factors had eroded buyer confidence.

"It is not the increase in interest rates as such that is spooking the market but rather the combination of government intervention, global economic uncertainty and a general concern about the future as well as a clear upward trend in interest rates driven primarily by the switch from the Hong Kong dollar to the yuan that is causing the market to tread water."

The economy was clearly slowing and developers were likely to release flats on a controlled "drip-feed basis", he added.

Cheung Kong (Holdings) has postponed the launch of La Splendeur in Tseung Kwan O, a joint venture with the MTR Corp, to this week to allow more mainlanders to visit its show suites over the weekend. — SCMP



http://www.theedgeproperty.com/global-market-watch/8322-rise-in-rates-sends-prices-sales-tumbling.html

Friday 9 September 2011

Strata Title to be issued upon hand-over of condo or apartment

According to Sin Chew Daily report on 6th Sept 2011, the Ministry of Housing and Local Government will table an amendment to the Strata Titles Act 1985 to make it compulsory for developer to hand over housing units to purchasers with strata titles.