KUALA LUMPUR: Malaysia’s household debt-to-gross domestic product continues to moderate, standing at 83.8 per cent in the first half of 2018 compared to 84.2 per cent last year.
Bank Negara Malaysia, however, said property market imbalances were seen persisting, with vacancy rates for office space and shopping complexes deteriorating further in the first quarter.
“Imbalances observed in the property market continue to persist. The number of unsold housing units, correspondingly increased to about 146,196 units as at end of first quarter of 2018, with more than 80 per cent of unsold units priced above RM250,000,” Bank Negara said in a statement today.
“Excess supply of office space and shopping complexes is also expected to persist as vacancy rates deteriorated further in the first quarter of 2018,” it added.
Nevertheless, the central bank said sustained demand for affordable housing particularly from first-time home buyers and prudent underwriting practice in lending to the property market and related sectors were expected to mitigate risks of a broad based price correction.
“Risks from household sector exposures continue to be mitigated by prudent underwriting and loan affordability assessments by financial institutions and sound risk management practices.
“New household borrowings remained of high quality. About three-quarters of new loans approved were to borrowers with debt service ratios (DSR) of less than 60 per cent.”
Overall, household debt accumulation had been on a more sustainable path relative to income growth, as a result of the cross-cutting measures that have been implemented since 2010.
“The ratio of household debt-to-GDP continued to moderate and currently stands at 83.8 per cent in the second quarter 2018 against 84.2 per cent in 2017,” Bank Negara said.
It said excess supply of office space and shopping complexes was expected to persist as vacancy rates deteriorated further in the first quarter of 2018.
“Nevertheless, sustained demand for affordable housing, particularly from first-time home buyers and prudent underwriting practice in lending to the property market and related sectors are expected to mitigate risks of a broad based price correction,” it added.
The overall household debt accumulation has also been on a more sustainable path relative to income growth as a result of the cross-cutting measures that have been implemented since 2010.