Youthful Buyers

Over the past year or two there have been an increasing number of younger buyers looking to become homeowners, a trend actively encouraged by lenders and the real estate sector.

According to Dona Eldeyana Johan, the head of product management and marketing solutions at Bank Islam Brunei Darussalam (BIBD), younger professionals are moving into the housing market, representing a change in life priorities. Whereas previously many young people would get a job, buy a car, travel overseas and only then consider settling down and buying a home, the timeframe has changed, with home ownership becoming a priority.

"Studies have shown that the younger generation may buy a car but after that they think of a house before even starting a family, which is a significant change," she said in an interview with local media in mid-May.

Brenda Low, Standard Chartered Bank's general manager of mortgages, agrees, saying that more young couples are applying to banks for home loans.

"These are people who are more financially savvy as they would prefer paying the loan instead of renting a house, because in 20 years they would own that house, which is more worthwhile," Low said in an interview with the local press on May 10

This is a trend that Brunei Darussalam's lenders – both in the conventional banking and the sharia-compliant segment – and the country's real estate agencies are seeking to cash in on. Some of the Sultanate's leading banks, including BIBD, Standard Chartered and Baiduri Bank, have put together packages aimed at attracting buyers from the younger end of the market, offering low interest loans spread over an extended term, in some cases of up to 25 years or more.

Grace Chan, from Baiduri Bank's home loan division, says that if buyers take advantage of the relaxed mortgage terms they should be free of debt before they leave the workforce.

"We want to keep the loans up to 25 years, and there can be arrangements to stretch the loan period up to 30 years, but of course we are hoping that the last few years before retirement, customers would have wanted to finish paying off their loans, instead of continuing their loans till retirement," Chan said at a property expo in mid-May.

While none of the banks are predicting a massive property boom or a bubble in the real estate market, there are a number of factors apart from easier access to credit that could spur activity.

Analysts are predicting rising interest in and around newly developed economic centres, such as at Muara and Tutong, where property prices are tipped to increase due to the Muara port project and oil exploration activities off the coast at Tutong.

However, rather than promoting the region to younger buyers, experts are suggesting investors consider getting in ahead of the market to take advantage of rental accommodation.

"Property will tend to attract a higher demand. At the moment, pricing there is still quite stable, so it's a good time to invest now," according to Standard Chartered's Low. "When the projects kick off, you will see more people investing in that area as expatriates and other employees need a home. Before the value goes up, it is now a tentatively good time to invest."

For younger buyers too it seems that it is a good time to enter the property market, both to get in on any rise in prices and to lay the foundations for their future.