An entire generation of young adults risk being locked out of the property market due to runaway house prices warns The National House Buyers Association (HBA)
HBA secretary general Chang Kim Loong said the rapid inflation of assets has put house ownership
beyond the reach of young adults.
“The prices are exorbitant and beyond the reach of young adults,” Chang told The Malaysian Insider. “The
price increases are not commensurate with salary increases. How are young adults going to catch up
(with house prices)?”
Property prices in urban areas such as Penang and Kuala Lumpur rose by up to 40 per cent last year
fuelled by low interest rates and a surge in speculative buying.
The average price of a KL residential property is now about RM485,000, or roughly nine times the average
urban household annual income of RM54,000.
The Demographia International Housing Affordability Survey rates markets, whose property prices are 5.1
times median income or more, as “severely unaffordable”.
The high prices of property in urban areas prompted the Najib administration to introduce a first-home
ownership scheme in March in addition to the loan-to-value ratio cap in a bid to stave off discontent.
However, lawyers and bankers say the first-home ownership scheme will not help those who take home
RM3,000 in total household income as the amount will not cover loan repayments due to rising prices for
food and other basic necessities and utilities.
The government’s My First Home Scheme launched in March will enable young adults aged up to 35 and
earning less than RM3,000 to get 100 per cent financing to buy houses worth between RM100,000 and
RM220,000 with a repayment period of up to 30 years. The measures also pale in comparison, however,
to efforts seen elsewhere in the region, such as China and Singapore.
The Chinese government last year introduced curbs on foreigners buying property and raised the
minimum downpayment for first-time buyers to 30 per cent from 20 per cent and banks were ordered to
suspend mortgages on third homes and above in some cases — in addition to hiking interest rates three
times since October.
Singapore, meanwhile, raised stamp duty on new properties to as much as 16 per cent of the sale price
to be paid by the seller if the house is offloaded within a year of purchase.
The amount that banks can lend for a second property has also been lowered to 60 per cent of the
home’s value.
So another problem looms on the horizon for eager beavers hoping to buy a house under the government's first home ownership scheme. It appears that they are just ripe for the burgeoning rental market, don't you agree?
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