In the space of a few weeks, I have a few developers approaching me to arrange for them to get bankers who are willing to finance their projects with the price that they have set their house to be sold for. Why this is happening is due to the fact that certain banks that they have approached have sent valuers to see and value the project and these valuers have decided that the houses shouldn't be sold at that price. This is rare one or two years ago as valuers and bankers have usually follow the price set by the developers. Most developers do not set the price at a whim but usually have done research and everything that needed to be done as they will need to entice buyers to buy the properties which they are trying to sell.
So, it is a wonder why bankers seem to be setting the bar too high for the developer as they are still willing to give financing to the buyer of the properties sold by the developers but banks are lowering the margin which they are giving financing too. A RM100,000-00 house, which usually can get a financing of 90% will now will only get a financing of 70% to 80% the most especially at the suburbs. Developers have come knocking on our doors (which is rare) as they cannot find a banker who are brave enough to finance their project.
I actually told off a few bankers as they seem to be creating a bubble on their own as they seem to be saying the data and the pricing for houses which are sold by developers are wrong. They are also saying that prices of houses which have been sold for quite sometime at certain prices are wrong and should be brought lower. This is a sub-prime crisis all on its own in the making.
Granted that developers do try to sell certain properties at unreasonable prices that they have been asking for RM1000-00 per square feet at places which can only reach that price if Malaysia has more expatriate community than what it has now. However, they seem to think within a space of a year or two, the places around the Malaysian icon, KLCC deserves to be sold at high prices. Within a year, when the economic crisis hits our shore, the prices has now come down.
However, that does not mean prices must come down in all places. Prices of building materials did rise and labour has become more expensive due to certain circumstances. Factoring this, shouldn't price of houses became a bit expensive. Naysayer may say it is good as people will have cheaper prices for houses but economic wise they may not see the repercusion in the long run. Hope these cases that my office are witnessing are just some isolated instances which are not so widespread. What are these bankers doing? Want to bring sub-prime here?
Under construction, but no financing?