The National House Buyers Association (HBA) has warned that an entire generation of young adults risk being locked out of the property market due to runaway house prices.
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.
