Malaysia property prices are going up. Time and tide wait for no man. DESPITE being a partner in a law firm just outside Kuala Lumpur, Ms Puteri Mohamad, and her fiance, can only watch as apartments in the area where she lives spiral above RM500,000 (S$196,000). When the government proposed measures in its 2015 Budget - released on Friday - to help households earning less than RM10,000 monthly to buy homes, she was not at all elated. We earn just over that but its not enough for savings. We can convert rent into loan repayments but we cant pay the 10 per cent deposit, said Ms Puteri, 33, who lives in a rented flat in Petaling Jaya. Many Malaysians like her find themselves locked out by a combination of what US-based urban development researcher Demographia rates as a severely unaffordable residential market and accelerating inflation. Malaysias consumer price index - which includes many subsidised goods - has risen by an average of 3.3 per cent so far this year and the government warns it may spike by 5 per cent next year, nearly triple the 2013 average. Government data shows that since 2012 median monthlyhousehold income has risen 8 per cent annually to RM4,258, slower than the average housing price increase of 10 per cent to RM280,886. Demographia rates housing as severely unaffordable if it is 5.1 times median annual income. Malaysia clocks in at 5.5x, higher than Singapores 5.1x, while housing in the United States and Japan is moderately unaffordable. Prime Minister Najib Razak said in his Budget speech the government would provide another 80,000 affordable homes (priced at RM100,000 to RM400,000) under the 1Malaysia Peoples Housing Programme (PR1MA) and introduce the Youth Housing Scheme that will waive downpayments and subsidise ownership by up to RM10,000 for 20,000 married couples under the age of 40. Both schemes, as well as the existing downpayment waiver under the My First Home scheme, are only for households with a combined monthly income of less than RM10,000. The National Housebuyers Association lauded the moves to help aspiring homeowners in financing but criticised the lack of new measures to cool rising prices which are the root of the problem. Its secretary-general, Chang Kim Loong, said speculators have taken advantage of the low entry cost of buying a property at the expense of genuine buyers. Office administrator Mimie Azriene Mohd Zin, 32, has no children but she and her technician husband have been unable to even think of home ownership until these schemes came along. They applied for a PR1MA home, which the government says is priced 20 per cent lower than comparable units, worth about RM200,000 three months ago. But they have not figured out how to afford the downpayment on their combined income of under RM4,000 a month that leaves them with little savings living in expensive Kuala Lumpur. We might not even be able to afford the repayment but we have to try before prices go up further, she said. That is, if she can get a loan in the first place. The central bank reported that only a third of My First Home applicants in the first year received loans as banks refused to take the risk. Tellingly, even PR1MA saw just 761 buyers for the 160,000 units launched since 2013. [email protected]
Posted on: Mon, 13 Oct 2014 01:13:00 +0000
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