There’s seems to be a trend emerging in Malaysia, in 2019 we’re seeing a surge of proptech firms embracing fintech.
Earlier this month, iProperty released a home loan eligibility indicator called LoanCare, an online tool that compares and calculates home loan eligibility instantly with up to 10 banks.Which in turn will give people a better chance in securing a home loan.
We were informed by industry sources some aspects of the technology were support by Finology, the guys behind the comparison site, Loanstreet.
Similarly, around the same time, PropertyGuru also released an online tool known as the PropertyGuru Home Loan Pre-Approval. Taking it a step further from iProperty, the online tool not only allows for home loan comparison, it also allows users to instantly apply for the loan they want. Its pre-approval solution is powered by MyProperty Data, a subsidiary of the public listed firm Technodex.
In both launches, executives from the respective companies have highlighted that the recently released online tools are in line with the current government’s initiatives to assist home ownership and focus on affordability.
David Mawer, iProperty.com.my General Manager said, “Insights such as a maximum eligibility comparison with banks and individual DSRs should not be difficult to find. Everyone deserves easy access to any and all information that will help them get the right home loan, without risking rejection.”
Bjorn Sprengers, Chief Marketing Officer and Head of Fintech, PropertyGuru Group echoes Mawer’s sentiment, “It’s not the fintech alone that does the trick. For the first time, key real estate industry players have come together to rethink the mortgage process across party lines. I firmly believe that such partnerships infused with innovation are the right path forward to truly solve one of the biggest roadblocks Malaysians face during their home-buying journey.”
Aside from established proptech going down this path, we are also seeing fintech founders making the switch to running their own proptech firm. Fintech News Malaysia reported that Soft Space’s co-founder Chang Chew Soon raised US$ 5 Million in seed funding to launch his proptech startup, which to no one’s surprise carries some fintech elements in it.
A market in decline
When it comes to the property market in Malaysia, we’ve been hearing the same narrative for the past decade or so: it’s been at the very least stagnant – if not in decline. Numbers released by the National Property Information Centre (NAPIC) seems to back that claim, with figures showing little changes, or in some cases reflecting a slowly dying market. In fact, the report showed 43,219 residential units worth RM29 billion unsold nationwide as of 3Q2018.
Image Credit: Wikimedia Commons
However, demand is hardly the issue. PropertyGuru ran a survey that alludes to a strong interest in property ownership, with 92% Malaysians stating they want to own a property.
The challenge often lies in the consumer’s ability to secure loans. Statistics by Bank Negara Malaysia shows that the home loan rejection rate is generally increasing year-on-year, while percentage for first time borrowers have been steadily decreasing since 2013.
From the controversial FundMy Home by the Edge, to the recent initiatives by the likes Property Guru and iProperty all signs points towards players employing fintech as tool as attempt to solve these perennial issues.
Building the ecosystem with fintech
Just a couple home loan approval calculation tools isn’t going to cut it. Unlike cash and carry businesses, the process of buying a property isn’t that straight forward. It relies on a network of businesses to come together working as a unit, and all these pieces must work together seamlessly.
Currently, the process of buying and selling property is separate from obtaining loans, which in turn is separate from applying for the necessary legal procedures, not to mention buying the necessary property related insurance.
All these processes are not only data intensive, it heavily rely on various forms of transactions. Fintech is able to bridge the gap between these processes by extracting the necessary data, plugging it into the processes, then using existing technologies to create platforms that serve as a seamless connection across all the processes.
Of course there is no one-size-fit-all solution, and the process of leveraging fintech for a unified platform will be a never ending process. However, it is undeniable that fintech is crucial not only for better support for potential buyers, but also to revive the struggling property market.
In the case of PropertyGuru, Home Loan Pre-Approval was built following the Mortgage Pre- Qualifier tool that was launched in August 2018. The company has since stated that they are working towards building an end-to-end ecosystem of complementary features that support home buyers throughout their home buying process.
With the help of fintech, the Malaysian property industry can improve efficiency in the home buying-selling process. At the same time, perhaps it has a shot at increasing home ownership, and solving the issues of unsold properties.