IS it “mission impossible” to own a home these days, especially for the younger generation?
It appears so — houses are too costly and way beyond the means of a middle-income earner, what more for the bottom 40 per cent (B40) group.
But owning a decent home is a basic necessity, a key for the B40 to upgrade. This housing conundrum has been particularly stark in recent years.
More specifically, there have been worries that newlyweds and young urban professionals may not be able to afford a house due to increasing property prices and cost of living.
Reportedly, the rise in prices, due to imbalances in supply and demand, has outstripped the rise in income levels of most Malaysians.
For instance, those in the middle-income group, who earn between RM3,900 and RM8,350 monthly, cannot afford a landed property in urban areas, such as Kuala Lumpur, which are priced between RM800,000 and RM1 million.
Neither can a young man in his mid-20s, fresh out of grad school and a new entrant in the workforce.
As a result, owning a house for some is no longer a life-long ambition. And what of their parents? They spent much of their adult life on housing — installments and renovations.
Some parents have no wish to see their children repeat the arduous journey just to own a home so the assets (including houses) they have acquired over the years are passed down to their children.
For others not so lucky, it’s either “rent for life” or until some other alternative comes along.
Understandably, when developers build homes, affordable or otherwise, they need to turn a profit.
Seriously though, homes in Malaysia have become unaffordable, even for the top 20 per cent (T20) segment. The National Property Information Centre’s Property Market Status Report for 2018 cites that Malaysia recorded 32,313 units of unsold completed residential properties last year, valued at about RM19.8 billion — a 30.6 per cent increase from the 24,738 units recorded the previous year.
Why not emulate China’s rent-to-own scheme — the government takes over the unsold properties from the developers, identify households needing homes and devises a rent-to-own mechanism for such households? Look at what the various income groups can afford based on their income — for example, about RM118,000 a unit for the B40, or RM230,000 for the M40 and RM400,000 for the T20.
Or take a leaf from Singapore’s Housing Development Board and build flats and sustain them so they don’t degenerate into urban slums. Or, the government could consider capping the price of affordable houses.
The long-term solution would, of course, be to raise wages to commensurate with the increase in the cost of living — a higher pay contributes to better purchasing power.
Another solution — invest in financial education in schools to create a financially literate population. It would ensure our young are “financially educated” and able to wisely manage their finances.
In preschools in England and Wales, children are taught how to use money, save and donate — all part of the education of living responsibly, says Universiti Malaya’s Social Wellbeing Research Centre director Datuk Dr Norma Mansor.