BNM’s reduction of OPR to 2.75% is an opportune time to review the state of property and affordable housing in the market

by FARA AISYAH/ pic by HUSSEIN SHAHARUDDIN

THE lower borrowing base rate will likely see a strong pickup in homebuyers taking advantage of lower mortgage rates and help lift the subdued housing market.

PropertyGuru International (M) Sdn Bhd country manager Sheldon Fernandez said the move by Bank Negara Malaysia (BNM) to reduce the Overnight Policy Rate (OPR) to 2.75% on Wednesday would act as a catalyst for homebuyers facing tighter lending rules from banks.

“The new OPR rate of 2.75% may lead to an upswing in purchaser sentiment as home seekers leverage on lower interest rates with renewed interest in home ownership in the first quarter.

“As such, it is an opportune time to review the state of property and affordable housing in the market,” he said in a statement yesterday.

He said although the lower OPR might have minimal impact upon home loan, based on the past reduction in the OPR to 3% in May 2019, it corresponded to loan approval increase by 13%.

He, however, cited that pricing and affordability concerns are still likely to be the main determinants in the uptake of the country’s overhang units.

According to PropertyGuru Malaysia’s recent Consumer Sentiment Survey, many home seekers have not applied for — or may not even be aware of — the numerous housing schemes and financing initiatives designed to help these demographics purchase homes.

The second OPR cut in eight months is expected to help stabilise not only the housing market, but to bring overall relief to borrowers.

“For 2020, growth is expected to gradually improve, with continued support from household spending and better export performance,” BNM said in a statement on Wednesday.

The central bank highlighted the downside risks of geopolitical tensions and policy uncertainties in a number of countries, but monetary easing across major economies in the second half of last year helped ease financial conditions.

Meanwhile, Hua Yang Bhd CFO Joe Tan said the local property market is still consolidating, but there are indications the market is responding well to the measures introduced by the government in 2019, such as the National Housing Policy and adjustments to the Real Property Gains Tax.

“We believe these initiatives, which are focused on first-time homebuyers who are our primary target audience, will leave a positive impact on affordable housing projects in Malaysia.

“Affordability remains the key focus in home ownership today, and consequently, there is a rising demand for affordably priced homes of high quality in strategic locations nationwide,” he said in a statement on Wednesday.

He added that Hua Yang will be introducing new projects within its key regions that are affordable, well located, with the right amenities and all well suited for its target market of young families and first-time homebuyers.