Of late I have been wondering how many of my contemporaries find themselves in the same boat as my good friend, Datuk Ismail, a retired civil servant. His only son, Karim, who just got married and was expecting his first child, had asked him whether he should continue to rent his present apartment in Shah Alam for a couple of years more or buy his own now. During a lunch date with my friend recently, he asked me for advice on the matter.
I reckon many parents with grown-up children are often asked the same. These children, the generation Y, have their own careers and no longer stay with their parents. I know of some doting parents (whom I call as “Category I parents”) who keep on “taking care” of their adult children, including buying apartments for them. However, not all parents are rich, and not all rich parents think that way. Some want their children to learn about life the hard way; the way they learned years ago when they, too, were young. They believe that adversity builds character, and hardship builds backbones. So, they want their children to fend for themselves. They will only extend a helping hand when it is absolutely necessary. I term such parents “Category II” parents. I think my friend is in this latter category.
So, what advice should he give his son? I suggested five things his son should keep in mind:
FIRST, he should set aside every month a definite sum from his monthly wages as compulsory savings. Let this nest egg multiply and increase over time. If this is done diligently, within two to three years, a sum equivalent to at least 10 to 15 per cent of the price of the property that he wishes to buy can be accumulated;
SECOND, he should stay focused on his dream and keep a lookout for properties he can afford, not properties he fancies owning. People in his generation sometimes confuse between the things they want from the things they truly need. Wants and needs are not the same, and they should keep this in mind;
THIRD, remember that what he really “needs” now is a modest home. For a start, a small apartment with two to three rooms will suffice. If a single-storey terrace is available at the right price, then he should go for it. If the property has a tiny plot of greenery, that will be a bonus;
FOURTH, be patient and keep a lookout for bargains. Avoid impulse buying. Do not get conned by smooth sales talk. Study the locality of the property which he intends to buy. Talk to the residents about safety, amenities, presence of immigrants, crime rate, etc; and,
FIFTH, do not forget the rule of thumb on affordability. His monthly repayment to the bank for the housing loan should not exceed one-third his monthly wages. If his wife is working, and they are buying the property jointly, then it should be one-third of their combined wages. Although under the current practice, a housing loan can extend up to 30 years or until the borrower reaches the age of 65, Karim must remember that he has other bills to pay, plus the obligatory savings for his child’s future education.
I told my friend that in Canada, its generation Y had become a “generation of renters”. Malaysia may very well be like Canada one day. In August 2012, the National House Buyers Association had stated that due to escalating price of houses, there is a real danger of our generation Y in Malaysia becoming a “homeless generation”.
In October 2015, the government launched a “Youth Housing Scheme” (YHS) where married youths (with a monthly joint income of less than RM10,000) will be offered the chance to buy their first house on a first-come-first-served basis. The problem — there will definitely be a scramble for the 20,000 units offered, and the chances for Karim getting a unit are slim.
Under the 2015 Budget, the Federal Government had set a target of building 80,000 PR1MA homes across the country. Unfortunately, by March 2015, the number of people applying for them was already seven times higher than the number of units available. By the middle of 2016, we can only speculate the number of applicants. Again, the prospects of Karim becoming one of the lucky purchasers do not seem bright.
Where does that leave him? Besides the Youth Housing Scheme and PRIMA homes, the only option left is private property developments. Here, the big question is affordability. As the social media pointed out, houses built by private developers now are no longer mampu milik (affordable to own) but mampu tengok (affordable to see only).
I told my friend, half-jokingly: “You have to become a Category I parent. Just buy for your son now, and solve his problem.” I then reminded him what my religious teacher taught me a long time ago: “The things you truly own are those that you give away.”
He laughed, and replied: “Yeah, I know. We cannot take our money along to our graves.”
Salleh Buang formerly served the Attorney-General’s Chambers before he left for
practice, the corporate sector and, then, academia