By Daniel Sim | Oct 11, 2011

Home ownership made easy

Owning a home is a form of comfort for most people. Property ownership not only offers a sense of security and belonging but also a tangible and valuable asset.

Recent world events such as the European credit crunch and US housing bubble crisis plus escalating inflation, has impacted the property markets in many parts of the world, including Malaysia.

Not only are property prices expensive, even renting a room in the Klang Valley could cost up to a third of a fresh graduate’s salary.

Visitors having a closer look at the miniature model of Plenitude Berhad's latest project, the Bayu Ferringhi luxury residences, during the Star Property Fair 2011.

Property prices too expensive
To cushion the effects of remarkable increases in property prices of late, the government launched a housing programme called, My First Home Scheme.The government initiated this programme to help the majority of the middle income earners own their first home.

But shortly after My First Home Scheme was launched, sceptics were quick to point out that this scheme were not feasible for the majority of middle-class Malaysians. The terms and conditions under this scheme were widely debated.

“It is almost impossible to find  landed property with a market value of RM220,000 in Kuala Lumpur. Some apartments in prime areas cost even more,” says C.K.Chong, a 25-year-old salesman from Johor. He is currently renting a room in Petaling Jaya and travels to work in Kuala Lumpur.

Building affordable housing
Aware of such urban issues affecting the working class, the government tasked the National Housing Company Limited (SPNB) -- formed in 1997 and wholly owned by the Ministry of Finance -- to spearhead an innovative housing scheme.

SPNB was mandated to build 38,000 houses with a market value of RM220,000 by 2020. As of May 31 this year, it has built 14,740 units or 26 projects worth RM196 million.

Another concern raised by sceptics was the eligibility criteria to own a home under this scheme. These homes were to be allocated only to those who earn RM3,000 and below.

A simple calculation based on the typical earning capacity of a fresh graduate and with commitments such as car loan and study loan, it would be almost impossible to survive with the little money that is leftover after deductions (See table 1.0).

(Table 1.0)

How many polled?
A recent opinion poll of over 30 respondents by StarProperty.my conducted in the Klang Valley, especially Kuala Lumpur’s Golden Triangle commercial centre. Over 50 percent of those polled are executives between 28 to 35 years of age and are single.

The poll indicated that they have specific desires.

- They prefer to buy landed properties under this scheme, and only if it provides suitable amenities that include within easy reach of public transportation such as MRT or LRT rail transit stations, in particular.

- Only 14.3 percent prefer to stay in Kuala Lumpur and over 50 percent prefer to live in Petaling Jaya.

One of the possible reasons why many people prefer to live in suburban areas rather than Kuala Lumpur is because the cost of living is lower and traffic is less congested. For example, daily meals can cost 50% less in PJ.

The majority of the respondents (88.9 percent) wanted houses under this scheme, to have a built-up space of at least 800sq ft or more. This group of people still thinks that the ceiling price of RM220,000 is too high for them and would prefer a more affordable price between RM160,000 to RM200,000.

The biggest concern faced by this group is not about the quality of the landed property nor the distance to their work place but the financial difficulty in paying the 30 years loan.

New and improved scheme
In addition to My First Home Scheme, the government, launched a new scheme called 1Malaysia People Housing Scheme (PR1MA) in July of this year. This time around, the government came up with a better solution to address some of the weaknesses under My First Home Scheme.

For example, Malaysians who earn below RM6,000 can now own a three-bedroom and two-bathroom apartments with a ceiling price of RM300,000. Each apartment has a reasonable built-up space of between 800sq ft to 1,400sq ft.

This scheme will be coordinated by 1Malaysia Housing Programme Development, a new company to be set up next year. Only then, can prospective buyers purchase their home under this scheme.

Differing from My First Home Scheme, buyers not only obtain 100 percent housing loan but also an additional five percent to pay for related expenses, such as lawyer’s fees and insurance premium charges.

The down-side for some buyers, is that the home owner would not be able to resell the house for 10 years. This is to prevent any short-term speculation of property prices for houses sold under this scheme.

Besides requiring developers to adhere to quality standards in building construction, another pertinent feature that the government hopes to see in this scheme, is the use of green elements so that it can produce a healthier residential environment.

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