Relax criteria for loans to boost affordable home ownership

Last update: 25/10/2019

KUALA LUMPUR, Oct 25  -- Several parties have called for the lending criteria for purchase of properties to be relaxed amid reports that house prices are beyond the affordability of most Malaysians.

House Buyers Association (HBA) secretary-general Datuk Chang Kim Loong said the problem faced by house buyers is that properties are too expensive given their income levels.

"There is no need for international studies to prove that houses in this country are not affordably priced.

"The problem of housing in Malaysia is that properties are too expensive compared to the people’s income levels. In fact, the BNM Annual Report 2016 said that since 2012, the rise in house prices in Malaysia has outstripped the increase in income levels,” he told Bernama today.

Chang said as a result of the rapid rise in house prices, the rakyat find it very challenging or impossible to buy their dream homes based on their current income levels.

And some will have their loan applications rejected simply because the banks feel that the credit risk is too high as the amount applied for is excessive in comparison to their income, he said.

Yesterday, Bank Negara Malaysia (BNM) director of financial surveillance Qaiser Iskandar Anwarudin said houses in Malaysia are considered “seriously unaffordable” by international standards.

Qaiser was reported as saying that based a methodology developed by Demographia International, a house is considered affordable if its price is not more than three times the annual household income of a prospective buyer.

Earlier, Bernama reported that Chang urged the government to review the rent-to-own (RTO) scheme announced in the 2020 Budget for the purchase of a first home priced up to RM500,000, as it is still considered very high for many prospective buyers.

He also said although it was seen as a proactive step towards opening doors for more people to own a home, it would be appropriate for the government to lower the threshold of RM500,000 to RM300,000.

Chang also urged prospective first-time house buyers to get practical advice from HBA before committing themselves to any purchases.

"Buying a property will be the single biggest purchase and financial commitment that the average rakyat will make in their lifetime and careful thought and planning must be done and should not be made on impulse or just because everyone else is doing it.

"A property purchase should also not be made just for the sake of getting married as it is better to live happier in a rented home than living unhappily in your own house," he added.

Congress of Unions of Employees in the Public and Civil Services (CUEPACS) president Datuk Azih Muda concurred with the international study on housing affordability and urged the government to take cognisance of it.

The government should review the National Housing Policy for public servants as many of them still do not have their own houses, he said.

"This is because the affordable housing price of RM300,000 is too high and beyond the reach of civil servants,” he said.

He said if the price is not reduced by at least RM40,000, these houses built by developers would be “affordable to see but not to own”.

Engineer Mohd Alif Mustaqim Mohammad Shah, 26, said he has not bought a house yet because he is particular about price, quality and affordability.

"If it exceeds RM400,000, then the quality must be worth the price,” he said.

Nor Amira Yusoff, 29, also wants to own a house but can afford to pay only RM1,400 a month in instalment.

"For now I can afford to rent only. I cannot afford to buy because most purchases require at least 10 per cent deposit,” she said.