News & Articles Distant dream for most
Distant dream for most
26 Sep 2015
MIDDLE-INCOME earners Suhaili Sahar, 31, and Ashley Wong, 27, could only sigh when asked about owning a house.
They have yet to secure their own house as property prices are well above their income level.
Suhaili, an accounts executive at a private company, earns about RM4,500 a month while Wong earns RM2,900 a month.
To purchase a house priced at RM400,000 at an interest rate of 4.5 per cent for 30 years, one would need to fork out a RM40,000 downpayment and RM2,611 in monthly instalments.
Suhaili and Wong would not be able to afford a house as banks require a minimum 40 per cent of their disposable income to be free of debts and liabilities. “It is quite impossible to obtain a loan with my salary.
I have been turned down by banks as I have other commitments, such as hire purchase loans and a credit card,” said Suhaili. “My concern is, house prices seem to rise faster than our income.
“If my salary grows at an average of five per cent a year, I would still be renting even after working for many years as house prices will always be beyond my means,” Suhaili added.
Wong wishes to start planning for her future and build her wealth but is having difficulties.
“I am aware of how much I can spend and how I can improve my credit standing, but with my pay, it is quite a feat to secure a property. “
I aim to own at least two properties so that I can rent them out to generate income. But I do not see that happening for another few years.
“The 1Malaysia People’s Housing (PR1MA) units are cheaper but there are strict rules. Since it is my only option at the moment, I will give it a try as buying from private developers is not a realistic option.”
The same predicament is faced by many middle-income earners in the city who have less money to spend on non-liquid assets, such as properties.
Interventions in the housing market have largely been on the demand side, by making housing financing cheaper or providing subsidies for buyers.
The housing supply interventions are the direct provision of low-cost houses or subsidising housing costs.
These measures are deemed unsustainable as they can drive up prices and result in higher household debt and opportunity costs on government finances.
Meanwhile, National House Buyers Association secretary-general Chang Kim Loong said the government should act against self-proclaimed property experts known as “investor clubs” that were manipulating the housing market through bulk purchases.
“They buy en bloc, up to 60 per cent of the units, with discounts of up to 25 per cent, and they pass it on to the members and make money from there.”
Club members, who could get up to 15 per cent discount, were willing to pay a membership fee of RM300 to RM6,000, he added.
Chang said he knew of about 30 such clubs in the country, although they had not been active this year due to the slower market.
“But we don’t want them to come back, and the government must come forward because there is no law to curb their activities,” he added.
They have yet to secure their own house as property prices are well above their income level.
Suhaili, an accounts executive at a private company, earns about RM4,500 a month while Wong earns RM2,900 a month.
To purchase a house priced at RM400,000 at an interest rate of 4.5 per cent for 30 years, one would need to fork out a RM40,000 downpayment and RM2,611 in monthly instalments.
Suhaili and Wong would not be able to afford a house as banks require a minimum 40 per cent of their disposable income to be free of debts and liabilities. “It is quite impossible to obtain a loan with my salary.
I have been turned down by banks as I have other commitments, such as hire purchase loans and a credit card,” said Suhaili. “My concern is, house prices seem to rise faster than our income.
“If my salary grows at an average of five per cent a year, I would still be renting even after working for many years as house prices will always be beyond my means,” Suhaili added.
Wong wishes to start planning for her future and build her wealth but is having difficulties.
“I am aware of how much I can spend and how I can improve my credit standing, but with my pay, it is quite a feat to secure a property. “
I aim to own at least two properties so that I can rent them out to generate income. But I do not see that happening for another few years.
“The 1Malaysia People’s Housing (PR1MA) units are cheaper but there are strict rules. Since it is my only option at the moment, I will give it a try as buying from private developers is not a realistic option.”
The same predicament is faced by many middle-income earners in the city who have less money to spend on non-liquid assets, such as properties.
Interventions in the housing market have largely been on the demand side, by making housing financing cheaper or providing subsidies for buyers.
The housing supply interventions are the direct provision of low-cost houses or subsidising housing costs.
These measures are deemed unsustainable as they can drive up prices and result in higher household debt and opportunity costs on government finances.
Meanwhile, National House Buyers Association secretary-general Chang Kim Loong said the government should act against self-proclaimed property experts known as “investor clubs” that were manipulating the housing market through bulk purchases.
“They buy en bloc, up to 60 per cent of the units, with discounts of up to 25 per cent, and they pass it on to the members and make money from there.”
Club members, who could get up to 15 per cent discount, were willing to pay a membership fee of RM300 to RM6,000, he added.
Chang said he knew of about 30 such clubs in the country, although they had not been active this year due to the slower market.
“But we don’t want them to come back, and the government must come forward because there is no law to curb their activities,” he added.
Source: nst.com.my