The number of unsold properties in Malaysia rose 43.8 percent in volume to 14,792 units and 70.7 percent in value to RM8.56 billion last year from 2015, revealed a report from the Valuation & Property Services Department.
A survey by the Real Estate and Housing Developers' Association Malaysia (REHDA), on the other hand, showed that 72 percent of commercial and residential units remained unsold in 2H 2016 from 71 percent in 1H 2016.
REHDA president Datuk Seri FD Iskandar Mansor attributed the increased number of property overhang primarily to difficulties in securing end-financing and high loan rejection rate.
However, he noted that Bank Negara Malaysia (BNM), the National Property Information Centre (Napic) and REHDA provide varying data on housing loan rejection rate.
Data from the central bank indicated that last year's loan rejection rate stood at 23.6 percent, while Napic and REHDA pegged it at 52 percent and 60 percent, respectively.
"How is it that there are different statistics from Bank Negara, Napic and REHDA? It is a matter of timing. Developers count the rejection rate from the time purchasers' loan applications are rejected by banks" explained Iskandar.
In concurring, Abdul Razak Mohd Nordin, executive vice-president and head of consumer finance at Malayan Banking Bhd, said there is a mismatch in the definition of loan rejection.
"When the customer comes to us, we do the pre-screening. First thing if the track record is not good we reject their application. For these customers, we don't take it as a rejection because it doesn't come to our books, but when we go back to the developers they look at it as a rejection" noted Abdul Razak, who served as a panellist at a REHDA forum entitled â€˜Status of Property Market; Is it status quo or on the road to recovery'?
According to him, most of the potential first-time buyers had their loan rejected due to their lifestyle. Another issue is the Central Credit Reference Information System (CCRISS) record.
"For those who are older, you must make sure that your record is good. Even the recent issues of the PTPTN (National Higher Education Fund Corp) falls under CCRISS so eventually from a banker's perspective, what we can advise potential home buyers is to settle their PTPTN loans first and then come back to us.â€
To ensure that their application will be approved and at the right margin, Abdul Razak advised the audience to maintain a good credit record.
"If you have that, then banks will favour you. You must also have the ability to prove your debt service ratio is good" he said.
"To increase that, especially for those who are single, they might as well have a joint application whether it's with their father, fiancee or whomever, for a better chance.â€