Bank Negara has lifted the restriction on bridging finance for development of residential properties and selected shophouses costing above RM250,000, a move analysts see as benefiting developers with the potential to build high-end properties, and one that may help accelerate loans growth in the banking sector.

However, the lifting of the curbs on bridging financing for shophouses applies only to shops within residential areas.

The bridging finance restriction on the development of commercial properties and projects involving shophouses priced above RM250,000 not located within residential areas remained unchanged, the central bank said in a statement yesterday.

Bridging financing for the development of houses and shops costing above RM250,000 was frozen in January 1999.

Since then, various measures taken to reduce excess supply in the property market had worked and the number of unsold residential properties had fallen, Bank Negara noted.

Based on the Property Overhang Report published by the Valuation and Property Services Department, the number of unsold residential properties at end-June 2001 had declined 31.4% to 35,203 units, compared with 51,348 at the end of last year.

Similarly, the value of unsold units of residential properties declined 26.5% to RM4.9bil at the end of June.

“As the banking system continues to be flush with liquidity, banking institutions are, therefore, in a position to extend financing for such projects, subject to regular viability assessment,’’ Bank Negara said. “Bridging financing by banking institutions would only be granted for those projects that have at least achieved break-even sales in value terms for each of the phases that are to be developed.”

This would ensure that the lifting of the curbs did not result in an accumulation of unsold residential properties, it added.

Bank Negara said the lifting of the restriction was expected to contribute positively towards the construction sector and overall domestic economic activity.

Analysts said the move would be beneficial to developers with land-banks in the Klang Valley, where prices of new houses generally cost more than RM250,000.

“Residential property is still in demand and this will help loans growth in the banking system,’’ Arab-Malaysian Securities head of research Gan Kim Khoon said.

Loans given by banks for the purchase of residential houses have seen robust growth in recent months, in part fuelled by low interest rates.

Gan said the recommencement of bridging financing would also help developers deal with cashflow mismatches. As it stood previously, they would have to finance a project from progress payments made by homebuyers.

Analysts said while sales of high-end residential properties had been robust and the resumption of bridging financing would help, the decision to actually build such properties would boil down to demand and location.

They said the lifting of the curbs would not lead to haphazard development of high-end properties as there were still some checks and balances.

“These days, developers are a lot more careful. They won’t launch a project for the sake of launching one,’’ said the head of research at a local stockbroking company.