Developers are offering creative financing packages to attract potential home buyers, given the sluggish property market and the stringent criteria of banks in granting housing loans.
“The market was still flat in the first quarter, with some developers delaying their launches. They are trying to move whatever stock that is still available, and we have seen Sunway Group, IOI Properties Group Bhd, Kuala Lumpur Kepong Bhd and others coming with very creative financing packages,” said Foo Gee Jen, Managing Director of CH Williams Talhar & Wong Sdn Bhd (WTW).
“Definitely, we see that trend coming to circumvent the fact that loans are getting tougher to get. So developers are actually offering a so-called olive branch to all these people.”Developers Offer Creative Loan Packages To Attract Home Buyers Click To Tweet
For instance, Sunway is providing loan packages covering up to 88 percent of a property’s value for those who will buy a home and sign the sale & purchase agreement from 29 March to 30 September. However, this is only available to individuals who cannot obtain a mortgage from banks.
For those who cannot afford to pay the down payment for a home outright, IOI Properties is offering a deferred payment scheme, whereby clients can pay it over 18 to 24 months.
Meanwhile, Tropicana Corp Bhd recently unveiled its ‘Just Bid It!’ campaign, wherein customers can place a bid on a property their keen to purchase, but the developer will set a minimum price on the unit.
“Some developers are indirectly also giving discounts, in many other forms. That is the only way to push the unsold stock that’s available,” he noted.
Foo noted that these companies are resorting to these marketing techniques to assist buyers and entice them in light of the weak market conditions.
“There are a lot of industries now pulling back and voluntary separation schemes (VSSs) are coming. Tesco just announced some retrenchment and streamlining of their staff and so forth. I think you can see that coming, which definitely will put a lot of pressure on the property market.
As such, the situation in the housing sector is unlikely to improve in Q2 2016 and the entire year is expected to be flat due to the soft job market and other uncertainties, he added.
Nevertheless, developers with good products and good track records will still be able to generate sales, but the overall real estate sector will continue to be in the doldrums, with some home builders unlikely to achieve their sales targets for 2016.