THE Housing and Local Government Minister Datuk Zuraida Kamaruddin told Parliament on Thursday that there are unsold houses valued at RM22.5 billion, 73 per cent of which are affordable homes priced at RM250,000 and above. When it comes to affordable houses, there appears to be another story behind the story.
The real story, so to speak. Conundrums are often that, layers upon layers of narratives hidden behind numbers. For starters, many who want to buy houses can’t buy them because banks are not lending them the money. And banks are not lending them because they do not earn enough to qualify for the loans. This brings us back to the crux of the matter: affordability. It appears that “affordable” homes aren’t really affordable.
When it comes to defining “affordable homes”, there seems to be as many definitions as there are players. To the government, affordable houses are RM300,000 and below. This accords with Bank Negara Malaysia’s findings as well.
Developers, however, seem to think that affordable houses are those priced RM500,000 and below. This will be a great stretch in a nation whose median income is a meagre RM5,228.
Many, especially the B40 (bottom 40 per cent) group, earn much less. Those in the B40 often find themselves left with RM76 after taking care of daily expenses. No bank in the country will be happy with RM76 as a monthly mortgage payment. The M40 (middle 40 per cent) may have slightly better bank balances, but there is no way they can afford houses in the range of RM500,000.
M40, as it were, are caught between a rock and a hard place. The National House Buyers Association (NHBA) has some ideas that may save the B40 and M40. NHBA says the definition of “affordable homes” needs a revisit. We agree.
It should not just be about financial affordability. It must take into account factors, such as location, amenities, distance and size. Given this and the country’s median income, a more realistic price is what the Selangor government had suggested recently: RM220,000.
But that doesn’t solve the funding problems that borrowers find themselves in. Socially-responsible banks have a great opportunity here to do their bit for the community where they operate in. In a recent Leader, the New Straits Times suggested that banks must think out of the box by adopting a rent-to-buy mortgage model.
Under the scheme, house buyers of RM220,000 should be enabled to rent their homes, say, for RM1,000 per month for an agreed period of years. The advantage of such a scheme is that banks can negotiate the monthly payments upwards as borrowers’ income rise. And if the banks are thinking of collaterals, the houses themselves can act as such. Banks needn’t worry too much about risks of such a mortgage model as property prices always appreciate under normal economic situations.
Understandably, under the rent-to-buy scheme, banks may take a bit longer to get their return on capital. But corporate magnanimity has its own rewards: a gain in reputation. The market often appreciates goodwill.