A property expert has urged banks to offer housing loans at lower interest rates to assist first-time buyers and tackle the oversupply of property in the country.

Previndran Singhe, who founded real estate firm Zerin Properties, said expensive loans were one reason why demand for housing remained stagnant, with an overhang of about 30,000 units worth over RM19 billion in 2018.

"Demand has not picked up," he said in a panel session at the International Conference on Greater Kuala Lumpur and Putrajaya yesterday.

"One of the biggest problems started in 2016, when Bank Negara Malaysia (BNM) introduced responsible lending guidelines. The quality of loans got better, but it was too hard a landing for the developers."

From then on, he said, rejection rates for housing loans were "very high".

"That's because they charge loans at 5% to 6%. We're not asking the banks to give interest-free loans, but there has to be a balance where they are responsible towards affordable housing as well."

In 2016, BNM put in place responsible financing guidelines to protect individuals' interests so that they borrow within their capacity to repay the loan.

Johor, Selangor and Kedah are among several states experiencing an overhang in housing.

Previndran warned of possible housing problems brewing in Kedah, where he said there is no release mechanism for Bumiputera units.

"If you can't sell after three years, you can't sell anymore. You might as well release those units," he said

He added that while Malaysia's house price index was low, it was unlikely to slow down anytime soon to a point where it would reach equilibrium.

"Equilibrium can only be seen if you look at the functions of demand and supply," he said.

"The demand is there, but the function of demand is also liquidity."

He reiterated the need for banks to give cheap loans, saying this would lead to a drop in rejection rates.

He also suggested that BNM hold discussions with government-linked company banks to lower interest rates.

Even if rates were lowered to 1% or 2%, he said, the banks would still make money.

"We are all in the same ecosystem, but why are only the developers taking the hit?"

Ho Chin Soon Research Sdn Bhd CEO Ishmael Ho meanwhile rebutted comments by an earlier panellist who said the younger generation was not keen to save up for property.

"It's easy for us to bash the younger generation and say that they are not saving enough money to buy a house, and that they are wasting money.

"It's not all true, at least for my circle of friends. They want to buy, but they can't afford to."

He also highlighted the problem of underutilised land in the country, saying developers should build in more convenient and strategic locations.

He said he had discovered through his research that the situation was partly due to Malay reserve restrictions.

"My perspective is, we should do away with it."