Property sector to reach inflection point soon

The property sector is expected to reach an inflection point soon, premised on sustained economic data, says Affin Hwang Capital today.

In a research note today, Affin Hwang maintained its ‘overweight' view on the sector, advising investors to take position on stocks with strong fundamentals and with discounts to value.

"One of the key challenges for the property sector is access to loans for potential buyers. We gather that loan rejection rates surged to 40% to 50% compared to 5% to 10% just three years ago.

"Last year, the number of total loans approved fell by 14.5% year-on-year, in line with the 14.9% drop in total loan applications for the same period," it said.

However, it said, the residential properties' impaired loans had been on the downtrend since 2007, with gross impaired loan ratio for residential properties remaining at 1.89% as at December last year.

"This tallies with the current high employment rate, suggesting that loans are still being serviced. As such, we believe, loan approval rates may likely remain stable, if not improve, in the medium term," it said.

Moving forward, the research firm expects developers to launch more affordable housing projects and landed properties within an established township.

"We foresee developers with higher exposure in the Klang Valley to continue to be the most resilient on the back of favourable population demographic and urbanisation," it said. - The Edge Property