The preference for owning expensive cars and maintaining a lifestyle beyond their means is preventing millennials from investing in homeownership.
Their level of awareness of the importance of owning a home is low as they do not consider it a priority, according to an expert interviewed by Bernama.
Universiti Sains Islam Malaysia Faculty of Engineering and Built Environment senior lecturer Ahmadsyafii’ei Abdul Kudos said young people need to be more aware of the issue of homeownership as it is an important step in ensuring long-term financial stability.
“Owning a home (instead of renting one) not only provides a permanent place for them to live but also serves as an investment with the potential to appreciate in value over time.
Ar Ahmadsyafii’ei Abdul Kudos
“With good financial planning and a better understanding of the real estate market, young people can achieve their dream of owning their own home,” he said.
He said the trend of renting is ingrained in today's young generation, warning it may have negative implications on their lives over the long term.
“First of all, they will continue to pay rent, which may increase over time, without the benefit of long-term asset ownership. Secondly, not owning their own home can undermine their financial stability and complicate future planning, especially in old age,” he said, adding some of them dream of owning a luxurious house and prefer to wait until they can afford to buy their ideal home.
“However, they don’t realise that house prices keep rising. This may lead to young people being trapped in an 'always unable to afford' zone when it comes to home-buying.”
IMPROVE HOMEOWNERSHIP POLICY
In January this year, a Bernama report – citing a study titled ‘The Variations in Preferences of the Young Generation in the Klang Valley Towards Housing Property Demand’ conducted by Universiti Putra Malaysia in mid-2022 – revealed that millennials (aged between 25 and 45) prefer renting for various reasons, one of them being their high financial commitments which prevent them from buying a home.
According to the findings of the study, for most of the respondents, owning a car was a benchmark of their success in life. Many also had credit card commitments with at least two banks.
Ahmadsyafii’ei said to encourage young people to buy homes at an early age, the government needs to increase access to affordable housing programmes such as those under PR1MA Corporation Malaysia and Malaysian Civil Servants Housing (PPAM), as well as Rumah Mesra Rakyat (RMR) or People-Friendly Housing schemes developed by Syarikat Perumahan Negara Bhd (SPNB).
He noted that while positive steps have been taken under the National Affordable Housing Policy – a sub-policy developed by the government to outline standards, key specifications, prices and guidelines for the development of affordable housing – there is still room for improvement.
He said the government needs to consider increasing access to housing loans and enhancing opportunities for homeownership among people in the low-income category.
“Various initiatives have been introduced to facilitate financing for buyers such as the i-Biaya scheme, Rent-to-Own scheme and My First Home scheme. These schemes need to be further promoted to encourage young people to own homes,” he added.
NO GROUP LEFT OUT
Commenting on the issue of homeownership among young people, the Ministry of Housing and Local Government (KPKT) told Bernama the MADANI government is deeply committed to ensuring that no group is marginalised when it comes to accessing housing, which is a fundamental human right.
In a written response to questions submitted by Bernama, the ministry said to enhance the supply of quality and sustainable affordable homes, the government is targeting to provide 500,000 such units nationwide during the 12th Malaysia Plan period from 2021 to 2025.
As of March 31 this year, the number of affordable homes completed and under construction stood at 288,968 units. This accounted for 57.8 percent of the target set for the 12th Malaysia Plan.
“In this regard, the ministry will continue to enhance cooperation with all housing providers at the federal, state and private-sector levels to ensure we achieve the target.
“KPKT is also committed to providing affordable housing through the People's Housing Programme (PPR) and People-Friendly Housing schemes or RMR for the B40 group, as well as SPNB and PR1MA residences for the M40 income group,” it said.
According to KPKT, various measures have been taken to help young people acquire homes, including providing financing initiatives to encourage homeownership nationwide, such as the i-Biaya initiative under the Housing Credit Guarantee Scheme.
“Through this initiative, the government provides housing financing guarantees of up to RM500,000 for first-time homebuyers including those without a fixed income or payslips such as gig economy workers.
“It (the guarantee) includes the principal financing amount, mortgage-reducing term assurance, mortgage-reducing term takaful, legal fees and valuation fees. This financing is not limited to new residences but also includes homes in the secondary market,” the ministry added.
AFFORDABLE HOUSING PROJECTS
The government is also committed to developing affordable housing for the B40 group, whether for ownership or rental, through PPR.
“Since its introduction in 1982, a total of 202 PPR projects, with a total of 115,039 housing units, have been approved, to date, for implementation nationwide.
“Of these, 164 projects involving 101,516 housing units have been completed, 19 projects with 7,517 units are still under construction while another 19 projects with 6,006 units are still in the planning stages,” the ministry said.
KPKT has also implemented People-Friendly Home schemes, under the management of SPNB, specifically for the B40 group who own their own land or have land owned by family members.
“So far, 67,405 units (in People-Friendly Home schemes) have been approved for implementation nationwide. Out of this total, 65,610 units have been completed, 1,442 units are currently under construction and 531 units are still in the planning stages,” it said.
About three months ago, the government announced that affordable transit houses for youths will be built in the Klang Valley through the Rumah Belia MADANI initiative. The programme aims to provide transitional housing for youths aged 35 and below.
INCENTIVES
To encourage the construction of more affordably-priced houses, the government, through its National Affordable Housing Policy, has stipulated that housing developers provide at least 30 percent affordable housing in any new housing development.
However, according to KPKT, state governments can implement this ruling according to local needs and conditions.
“To encourage developers to build affordable housing, the MADANI government is offering them incentives. One such incentive is the reduced deposit requirement, where developers building affordable houses only need to pay a deposit of RM200,000 to the Housing Development Account (HDA). Developers who don’t build affordable houses must pay three percent of the construction cost to HDA.
“The government has also provided a fast lane for the approval of planning permits and building plans. Other incentives are also provided under state governments and local authorities to assist developers in building affordable housing including full exemption from compliance and development charges,” the ministry said.
In response to suggestions for the government to take over the construction of facilities in residential developments and provide subsidies for building materials – given that basic facilities are currently provided by developers, leading to higher housing prices – the ministry said ensuring quality and liveable affordable housing will remain a priority in the national homeownership agenda.
“KPKT continually reviews various aspects that can help reduce the costs of developing affordable housing, such as identifying strategic site locations with state governments to lower additional costs like infrastructure provision, and collaborating with relevant agencies to address housing issues, particularly housing prices and their solutions,” it said.
The ministry added the government also encourages developers to conduct a feasibility study before proceeding with any development to ensure the prices of the houses built are within the financial means of the people, thereby avoiding unsold properties.
Regarding bureaucratic delays which contribute to increased construction costs and subsequently higher house prices, KPKT clarified that based on studies by the industry and research institutions, several factors influence house prices.
“These factors include the strategic location of the house, and construction, infrastructure, land and compliance costs, as well as developers’ profits.
“In efforts to stimulate investment and improve the ease of doing business in Malaysia, KPKT consistently coordinates with local authorities to expedite approvals and ensure a fast, accurate and transparent process in the housing sector,” the ministry added.
