HOME buyers are making increased use of mortgages for purchases in Cambodia, as the market “slowly wakes up”, according to experts.

Commercial banks had slowed direct loans to property development in the wake of the 2008 global financial crisis, though mortgage lending has increasingly filled the space, said National Valuers Association of Cambodia President Sung Bonna.

“It has helped a lot with gradually improving the whole industry,” he said. “There are now lots of opportunities, especially home loan services for individual people – that’s the main driver for growth.”

Canadia Bank Vice President Dieter Billmeier said the bank had extended some $79 million in mortgage loans to 1,100 customers by the end of 2010.

“We give mortgage loans for up to 8 years, with interest rates averaging between 10 – 12 percent,” he said.

“I also can see in the last 5 months increasing imports of construction material, the market is ‘waking up’ again, slowly but steadily.”

ANZ Royal Bank CEO Stephen Higgins said the bank offers mortgages to retail and individual customers for up to 20 years, but added it did not focus on lending to property development projects.

“Property development is simply too risky. In terms of the property market, generally it is still quite soft and probably is still over-valued,” he said.

Still, bankers said mortgage lending was becoming more popular in the Kingdom.

HwangDBS Commercial Bank General Manager Han Peng Kwang said the bank had allocated about 25 percent of its loan portfolio to housing loan products.

A few key factors supporting vibrant investment and robust home ownership are in place, such as growth in retail and business loans as well as a regulatory framework protecting private property, though some steps need to be taken, he said.

“Our local legal framework needs to develop further such that there is greater confidence,” he said.

“We want to assist in the growth by providing housing loans to individuals to enable them to purchase their own residential houses. As a result, developers will be able to sell more houses and contribute the growth of the economy.”

Independent economist Kang Chandararot urged Cambodian financial players to begin offering real-estate loans as the domestic economy continues to improve.

“We should try to [extend housing loans], but it could be made a bit easier with some conditions or lowering interest rates on housing loans,” he said.

However, many people and real-estate sector players had been hard hit by the crisis, and had lost confidence in the sector, he added.

The global economy is still facing threats from food hikes, rising inflation, and fluctuating oil prices, he said.

Sung Bonna said the real-estate and construction sectors had shown improvements on last year.

“I am seeing positive signs from the recovery of the sector, as the flow of FDI and increase in international interest from countries like Japan, Malaysia, Singapore and Vietnam – it’s a good sign for the improvement of the industry overall,” Sung Bonna said.