Young Malaysian professionals struggle to own property not just due to the recent central bank ruling but also because of prevailing high property prices.
Fresh graduate K.T.S. Chua (23), who recently applied for a RM30,000 personal loan to fund his hotdog business is thankful at narrowly missing the tenure cap of 10 years for personal loans. However, the 35-year tenure limit for housing loans has dampened his plan for a bachelor pad. Thus, Chua has no choice but to live with his parents and two siblings.
“I was looking to get a place of my own; unfortunately, the new ruling will gravely affect my plans to purchase a home. Without the new cap, it is already so hard for me to buy property and I will have to put it on hold.”
“Needless to say, I am really concerned about the higher monthly repayments and qualifying for the housing loan,” he noted.
Nonetheless, Chua believes that the real problem is the spiralling property prices and the static growth of wages, not the new rules from Bank Negara Malaysia. This is because home prices kept on rising but the income of fresh graduates and some seasoned workers have remained the same.
Thirty year-old lecturer Cheryl Withaneachi concurs. “Many of my friends who are around my age cannot afford a house and this is not only due to the ruling of late but the exorbitant house and apartment prices,” she explains.
For a property to be considered as ‘affordable’, it should meet three criteria, according to a study by the World Bank and Harvard University and the World Bank.
First, its price should be within three times a borrower’s annual household income. Second, all combined repayments should not surpass 50 percent of a borrower’s income and the third factor is that a single monthly repayment should not exceed a third of the monthly income.
Farah Wahida, Editor of PropertyGuru, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my
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