Housing Sector Showing Signs of Life as Bank Loans Encourage Buyers

An increase in mortgage loans is helping to rebuild the housing sector after months of little activity in the real estate market, banking and real estate experts said yesterday.

Since the start of the second quarter, residential property transactions in densely populated areas such as Phnom Penh jumped 3 to 5 percent, compared to the same period last year, said Sung Bonna, chairman of Bonna Realty Group.

“There has been a strong movement in buying and selling housing property, compared with areas with low populations,” said Sung Bonna, chairman of Bonna Realty Group.

Foreign investment in the residential sector has sunk about 30 to 40 percent since the peak of the housing bubble in 2008, accounting now for a mere 20 percent of the market, said Mr Bonna,

Among the most popular areas for property purchases are in Chamkar Mon district’s Boeng Keng Kang I commune, where housing space is selling for $1,400 to $1,600 per square meter, down from $2,500 to $2,800 in 2008.

Preah Monyvong boulevard is also seeing more purchases for properties selling at $3,000 to $4,000 per square meter, down about 25 percent from 2008 levels, and Tuol Kork district, where space is going for $500 to $1,000, down from a larger 50 percent.

But experts say there is still a need for more foreign investment to really give the sector a boost.

“We are observing that real estate transactions are moving forward gradually, and that most of those involve homes and land,” said Sier Chhaylin, director of Visal Realty. “We are awaiting the return of foreign investment in order to develop the sector again, and bring demand to property.”

In another sign that the residential market is again experiencing some growth, bankers say that 2010 has shown growth in mortgage loans. John Brinsden, vice chairman at Acleda bank, said there has been “a noticeable uptick” in housing loans this year. And Dieter Billmeier, vice president at Canadia Bank, said he has seen housing loans increase by about 10 percent this year over last year.

“Loan applications during this year for housing loans are a combination of loans for new homes and improvements” on existing homes, Mr Billmeier said by e-mail yesterday. “However, housing loan applications over the last 3 to 4 months show a clear trend into buying new homes.”

 

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