The emphasis on homeownership has meant that a growing number of people end up buying homes that eventually become a financial burden to them.
The average price for a new apartment in Malaysia reached RM582,887 in the first quarter of 2024 (Q1 2024) while the average subsale sales price was RM521,614, according to a report by real estate technology group Juwai IQI.
These prices are higher than the National Property Information Centre’s (Napic) average house price of RM467,144 in 2023. Property prices are expected to rise significantly in the first half of 2024 due to rising building material costs, with construction prices expected to increase by 15%.
In light of this, Center for Market Education fellow Consilz Tan said homeownership had created a “household debt trap” leading to a retirement crisis.
“We should focus more on rental markets instead of homeownership.
“Without proper financial planning and fund allocation, one should not rush into housing debt just to own a house,” she told FMT Business.
Housing and local government minister Nga Kor Ming has said 76.9% of Malaysians own their own homes and that the government hopes to see this number increase.
Rent-to-own options
Tan favours rent-to-own schemes and hopes more financial institutions will participate in such initiatives.
“There should be an improved version of PR1MA rental homes and Skim Smart Sewa to Ownership for a fairer allocation of houses to homebuyers,” she added.
Moving forward, Tan said the finance ministry should consider extending the i-Miliki initiative for those seeking to buy their first home in the secondary market.
“The mechanism of application has to be transparent and aggregate data should be made available to the public so that we are aware of the take-up rate,” she said.
i-Miliki is a government initiative where purchasers of homes priced RM500,000 and below are fully exempt from paying the stamp duties on the memorandum of transfer and loan agreement. Purchasers of residential units priced above RM500,000 and up to RM1 million get a 75% exemption from the stamp duties.
The initiative began on June 1, 2022 but ended on Dec 31, 2023, prompting calls for an extension.
Meanwhile, Juwai IQI co-founder and group CEO Kashif Ansari said house prices would continue rising throughout 2024.
“The drivers of the (property) market have been relatively high employment and household income in Malaysia, infrastructure development and pent-up demand being released after the pandemic,” he told FMT Business.
“The government is spending billions to make housing more affordable and constructing tens of thousands of affordable homes every year. It has built 250,000 affordable homes so far and is aiming for another 250,000 by end-2025,” he said.
He said mapping affordable housing prices according to local income levels was a huge step forward.
“That will make it much easier and cost-effective to provide affordable housing that’s appropriately priced for the people,” he added.