As I was saying in my last column, there are several actions which if implemented, will surely help to spur the purchase of affordable homes by genuine first time buyers. Of course there must be an unconditional support from all the parties involved and a fair behaviour by the purchasers.
Firstly, Bank Negara; our central bank authority should release some of the introduced curbing measures by allowing, only for first time home buyers, easing the high “cash-out” that purchasers have to get ready for when deciding to purchase an affordable home. In case our purchaser is buying a strata property, the cash-out amount might be limited to RM38,596.00 as Stamp & Duty on MOT will only be charged later on. But still the amount is impressive if we consider that a RM320,000.00 home will possibly be purchased by a household with a monthly income of RM5,000 to RM7,000.00. How long will it take a family to save enough to proceed with the long sigh for dwelling purchase?
A research conducted in 2013 by Sime Darby and the University of Malaya has been determining that the average Household in Klang Valley has a mix of out-goings as per the iconographic below:
By looking at an average house-hold income as per what mentioned above, RM5,000.00 to RM7,000.00, and using the percentages showed in the iconographic above we can estimate the following minimum time-frame, as per currently imposed “terms & conditions” (BNM), to enable a young family to buy their first home with values as per our previous table.
Nowadays, people are getting married not at a very young age, but between 28 and 34 years; which means that young families, as per current situation, will be able to look into their first home from the age of 40 and above. What if any unforeseen extra expenses suddenly comes in? What will happen to house values within the next 5 to 6 years? Isn’t there a very high chance that property values will move upward?
It is an extremely unfair situation and not a viable option to finally housing the nation.
Further difficulties are coming in if the future owner/s have accessed a PTPTN loan for further studies and possibly forgotten that what is borrowed first must be repaid later. I’ve already written about this hidden gigantic issue which might be placing totally out of reach whichever property for the unlucky ones.
Not to mention the unreasonable standing of some banks which are slashing to a mere 80% or 85% the margin of financing for those affordable properties (priced below RM500,000.00).
Last but not least, most developers are still building unaffordable homes not because of the RM psf but due to the huge size (abundantly above 2,000 sq.ft.) of the dwelling’s design.
Where is the logic of all the above? It’s a total nonsense and by keep on talking and not acting, this problem will keep on growing instead of being finally solved!
A bit of common sense for everybody
Developers: Please build normal homes sized between 1,000 and max 2,000 square feet. Above all, please, do not fit the homes with M&E and cabinets but leave the purchaser the right to choose what they like. In this way there will be much higher chances to obtain more affordable values.
Purchasers: The ones of you with outstanding PTPTN balance please go and discuss a repayment plan which will avoid your blacklisting as, since 1st April 2015, Bank Negara has started uploading the delay in repayment and many “bad PTPTN paymasters” have already been blacklisted! For them, unfortunately, purchasing their first home will remain a dream for a very long time.
Bank Negara: The wish list for BNM is quite long; hopefully it will be read and at least partially taken into possible consideration:
- Allow developers to reinstate the 10% deposit rebate for first time home buyers as it is still the fastest and most practical way to obtain 100% financing. If not full rebate, at least allow a 3% deposit only.
- Another good help for first time home buyers will be the possibility to avoid the payment of any interest during construction. Only for first time home buyers please re-introduce the DIBS.
- For those PTPTN bad paymasters; why it is not possible to find a solution contextual to the home purchase? A minimum agreed upon and affordable amount per month should be transferred from the financing bank directly to PTPTN till balancing the outstanding study loan. There should perhaps be a committing document to be signed upon completing the Loan Agreement for the purchase of a home.
Government: Developing affordable homes is becoming more and more difficult for the private industry players as the reduced profitability leaves a zero margin to mistakes and unforeseen events. Is there any chance to introduce some sort of subsidies to reduce the burden on the first time home buyers? Defining an affordable-home values table which will grant; reduced premium/authority contributions/utilities contributions and so on will surely spur the supply of more affordable homes in the near future and possibly see the nation being final housed.
It is always easy to talk, I’m fully aware of this, but we really need to start from somewhere and the above are few opening discussion points that if properly carried on might have a good outcome in a relatively short time……My 5 cents with no intention of hurting or offending anybody.