Property market to collapse once moratorium is over? These days, everything seems negative. Someone prominent just posted some negative news about COVID-19 and yet refused to also state clearly on recovered cases. Somehow this person also forgotten to mention that vaccines are also on the way. Well… perhaps such a negative news will be a super positive news for the stock market for glove companies then? This is why sometimes I wonder why do people say certain things the way they say it. So, how will this fit into the moratorium and property market scenario? Everything turning bleak?

Moratorium ends on 30th September. Everyone must start to repay their loans, especially the home loan which is a huge financial responsibility. So, do they have the money to start repaying? It depends on whether they have back their job, receive back their usual pay or still without a job.

Unemployment is NO LONGER at 5.5%. The number is now lower at probably 4.6%. By the end of the year, a senior economist; Julia Goh UOB Research said that this unemployment may reduce further to 4.5% (click here to view). There are still over 700,000 or close to 800,000 Malaysians unemployed (depends on how you want to look at it) as per that latest numbers from Department of Statistics Malaysia. (click here if you like to know) Yes, everyone needs to note that our typical unemployment rate usually hovers below 4% all the time.

Could people pay then when October comes. Guys ah, when they got their loans approved, they have the salary to sustain that loan… remember? So, the question is not whether they could pay but whether they have back the salary. Unemployment number is a good start.

Surely there will be firesale units? Surely there will be firesale units? Probably you are right. These units may become slightly elevated than when people had their jobs. Today, some of them do not. However, this is unlikely to be widespread because even their lenders do not want this situation.

Banks’ action for these borrowers? Most banks have announced that they have already started to communicate to their borrowers especially on possible selective extensions. Many banks are opening their branches even on weekends too. They do NOT wish to have borrowers defaulting and they take back the property and the property had to be auction off in a slow property market too. In other words, they also do not want the property market to collapse too. Does not benefit them yeah… (As an auctioneer, of course I will be happy if there are more auction cases but this is not good for the banks)

Briefly, if the people who managed to get their loans approved has a job or has gained back a job, they will be able to start repaying in October. The ones who could not, they need to tell their banks and they may get another 3 months’ extension. Hopefully they somehow know that the banks would like to speak to them as well?

The banks are also more than willing to offer this 3 months extension if the borrowers are really in financial difficulties. No banks would want to take back any property and having to auction it at a price which could not even cover the remaining loan amount… Does not benefit the borrower, does not benefit the banks and does not benefit their Non Performing Loan numbers too.

Happy understanding about the potential for the property market to collapse once moratorium is over. Disagreeing with this view is fine too, just get ready with money to buy if you still think property market will collapse after moratorium ends. As for me, I will just earn my auction fee even if I would not want the possibility of the property market to collapse. Cheers.