“There is a first time for everything” is a common phrase, so it is no surprise that each Malaysian aspires to own at least one property in their lifetime.
However, the difficulties for first-timers to realise their homeownership dreams have caused mixed emotions and uncertainties among those ready to climb the real estate ladder. This has lead many to engulf with doubts given the huge responsibility and long commitment.
Among reasons one may not be able to purchase a property are a mismatched socioeconomic status, poor credit scores, lower financial standings and high debts. These factors only end up limiting the ability of purchasers to afford a property, let alone be able to qualify for end-financing.
As this may deter and dampen buying confidence, there may be ways in which first-time homeownership is nevertheless, attainable.
First-timers’ desires to buy properties have continued moving in the upward trajectory, as observed in the PropertyGuru Malaysia Property Affordability Sentiment Index H2 2016.
From the survey held last year, majority of respondents (41 percent) who were first-time home buyers were planning to purchase properties in the first half of 2017.
On how much an individual can fork out to purchase a property, the survey showed 38 percent of respondents have an allocation of RM300,001 to RM500,000 while 23 percent respondents have a budget for less than RM300,000 for a home.
This signifies the working class’s place in the current property pricing, i.e. the demand and market for affordable houses has seen a rise in the past years.
In support of this rising path of homeownership among first-timers, the Association of Banks in Malaysia’s official statistics shows that in 2016, 72 percent of the total amount of loan approvals last year consisted of first-time homebuyers of properties priced below RM500,000.
This trend was further noted in in the first quarter of 2017, where banks have approved RM22.3 million worth of housing financing to 90,137 borrowers across the nation.
Out of these approvals, more than half were borrowers of affordable housing units priced below RM500,000, according to Bank Negara Malaysia’s statistics.
So, what is driving homeownership up and making it more attainable among a handful of first-time buyers?
Improved affordable housing initiatives
Demand for the 1Malaysia People’s Housing (PR1MA) houses has been overall encouraging, with a total of 9,791 unit’s worth RM2.3 billion sold to date.
A total of 1.42 million people has registered for PR1MA homes nationwide and 17,000 units are slated for completion by year-end.
This trend has led to more private property developers building affordable homes, as mentioned by Perbadanan PR1MA Malaysia CEO Datuk Abdul Mutalib Alias, who said previously, not many developers were involved in building homes for the middle-income group.
“But we have noticed that over the last few years, especially after we started marketing our products, developers have been targeting the same market,” he said.
Over and above, higher withdrawal funds and the exemption of 100 percent stamp duty as announced in the budget 2017 for first-timers has encouraged more homeownership.
Additionally, government initiatives such as MyDeposit Scheme that provides a subsidy of RM30,000 or 10 percent, whichever is lower for first-time homeowners to buy properties received 7,347 applications for the first instalment from April to June 2016.
Moreover, state government initiatives such as Rumah Selangorku and Rumahwip providing affordable housing for first-time homebuyers have been widely received and talks on increasing the number of units have been reported.
By end of this year, the Selangor Housing and Property Board targets to develop 10,000 Rumah Selangorku units while Rumahwip has a target of 80,000 units by 2020.
Meanwhile, PropertyGuru Malaysia country manager Sheldon Fernandez said that PropertyGuru welcomes the government’s affordable housing schemes and supports the concerted efforts to provide homes for the middle-income segment.
“However, going forward, it would be good to see greater collaboration between the different programmes by state and federal governments as well as different agencies for the benefit of the Malaysian public,” he said in an interview.
The right mindset
Majority of potential homebuyers still face hurdles when it comes to buying properties because there is a mismatch between demand and supply for affordable housing, especially in urban areas.
First-time homebuyers comprise young professionals, newly-weds or those with small families who understand the importance of responsibility and commitment.
Between young ages of mid-twenties onwards or with incomes of RM3,000 and above, these group of individuals are ready to step up in their life where owning a property is an advancement to garnering success.
To secure a roof over their heads, these buyers have the right attitude, make sound decisions in tandem with their current socioeconomic status and is supported alongside prudent financial provisions.
First-time buyers keep abreast with the current real estate trends and initiatives provided by financial institutions, parental guidance, government and developers, given their nature of being tech savvy.
Additionally, they are aware of the repercussions of a bad credit history that can have in affecting chances of securing end-financing, therefore they are disciplined to keep to the banks’ requirements as much as possible.
So, if you’re keen to get onto the property ladder don’t fret as there are many ways to get on it. You’ll just need to ensure these steps are taken first:
-Create a financial budget with a yearly projection
-Include your current obligations and factor in upcoming commitments into the budget
– Be realistic and find a property that will only cost you 1/3 of your current salary
– Ensure your CCRIS is up-to-date
– In the event of a bad credit score, seek financial help to reduce the risk of facing a loan rejection
– If you are a PTPTN loan applicant, make repayments regularly, otherwise revise the payment scheme to suit your financial standings
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