(From left) Chua and Ting at the StarProperty Budget 2025 Roundtable discussion. — YAP CHEE HONG/The Star

Still recovering from pandemic blows, majority of home buyers still struggle

By Yip Wai Fong

The Covid pandemic, though now largely seen as a chapter in the past, has reduced the wealth of Malaysians and made buying homes a struggle for many of them. 

Presently, while many Malaysians aspire to own homes, they are challenged with high household expenditure and a smaller income or a smaller wage growth.  

The Statistics Department (DOSM) and the Bank Negara Malaysia (BNM) have noted respectively that the unemployment rate and the private sector nominal wage growth in 2023 are still not on par with the pre-pandemic level while Khazanah Research Institute (KRI) pointed out in its latest research that between 2019-2022,  the overall household expenditures increased while residual incomes declined across all income categories. 

With an inflationary environment that moderated only in 2023, this suggests that Malaysians have been spending more due to inflation and/or to support the unemployed in their household or extended family -  on a smaller income or little wage expansion.  

Malaysians’ saving quantum during the period has been eroded and this is corroborated by developers at the StarProperty Budget 2025 Roundtable discussion,  who observed a general trend of home buyers’ difficulty in affording the first down payment. Some also said that many were deemed ineligible for a home mortgage, or unable to secure the financing margin desired, another worrying sign of the people’s affordability. 

During the discussion as well as post-event, recommendations were put forward to home buyers in the coming Budget. 

A comeback of HOC 

Across the industry, the Home Ownership Campaign (HOC) is widely credited as a success in lifting home buyers’ sentiment and the property market in 2020-2021, leading to suggestions to bring it back with certain changes made for the current conditions. 

“If we recall, the HOC gave stamp duty exemption for houses priced up to RM2.5 million. We suggest to the government to give full stamp duty exemption for property up to RM1 million. I think those (categories) of up to RM2.5 million are not necessary. I think RM300,000 to RM1 million is more appropriate,” said Sabah Housing and Real Estate Developers Association (Shareda) president Datuk Chua Soon Peng.

“To the developers, HOC had reactivated the housing market. But the incentives are not for developers to save money, it is for the buyers,” he added. 

“HOC has been pivotal in boosting home purchases, especially during the pandemic. The initiative’s extension until 2021 helped clear unsold inventories and provided relief to both developers and buyers,” said Matrix Concepts Holding Bhd chief executive officer Chai Keng Wai, who contributed to the discussion post-event.

“We could collaborate with local government bodies to initiate a region-focused HOC, where homeownership rates could be further boosted with targeted incentives,” he suggested. 

“We hope there will be valuable goodies to be added in Budget 2025 across the industry; perhaps a repackaged home ownership stimulus such as the HOC and fiscal incentives to encourage more investments,” said SP Setia Bhd chief operating officer Datuk Zaini Yusoff, who contributed to the discussion post-event. 

EPF loan and monthly repayment schemes

Allowing EPF monthly contributions to go towards monthly mortgage repayment will reduce first-time home buyers’ burden, said Low. — YAP CHEE HONG/The Star

Other than banks, the Employees Provident Fund (EPF) could also step in to provide loans for first-time home buyers, as this group consists of those who might have just started their career during the pandemic. 

The proposed measure would be particularly welcomed in Sarawak, where the disparity between income and cost of living presents severe challenges to potential home buyers, said Sarawak Housing and Real Estate Developers’ Association (SHEDA) deputy president Louis Ting. Due to difficulty in making a down payment, home buyers were denied an opportunity to own homes. 

Louis suggested that EPF provide a loan of up to five times the borrowers’ income to assist them in making the down payment. This loan will be for first-time home buyers only. 

“Instead of EPF receiving deposits, they should also look into providing loans to first-time home buyers and have security measures in place to prevent abuse by the borrowers. This is how we might help those who are less privileged,” he said. 

Land and General Group managing director Low Gay Teck suggested allowing the monthly contribution to go towards mortgage repayment, not only to reduce the monthly burden of first-time home buyers but also to secure their home ownership as the property prices may rise at a higher rate than EPF’s dividend. 

“Property prices have risen so much compared to decades ago. (Today), if home buyers buy a property when they are in their 30s and use their monthly EPF deduction to pay for the mortgage, they will own the property after 20 years and I think it is not difficult to put in a mechanism so that they don't abuse it. 

“Most of the property has got a title. If the title is transferred, the transferor will have to pay back whatever money taken from EPF. So that will prevent abuse.”

“I am of the view that allowing EPF monthly deduction to go to payment of financing should be open to all home buyers because it is their own money after all,” he added. 

While the economy is making a good recovery since the pandemic, the majority of home buyers are still in an interim period before reattaining the pre-pandemic level of financial well-being. The first-time home buyers from among the younger workforce might struggle more during the period as the wage growth was slower than their predecessors. As such, government initiatives will not only bolster the resilience of the property industry but also promote household stability and sustainability by encouraging homeownership. 

“We could collaborate with local government bodies to initiate a region-focused HOC,” said Chan.

Box: Recommendation

1. Reintroduction of the Home Ownership Campaign (HOC) to support Malaysians seeking to purchase property, make home ownership more accessible to Malaysians, particularly first-time buyers.

1. Support in the form of grant, stamp duty waiver, and others: 
   1. To provide first-time homebuyers a grant of up to RM30,000 and a lower, fixed rate financing for property priced up to RM500,000. 
   2. Stamp duty exemption for purchase of home priced up to RM600,000.
   3. Stamp duty waiver for first-time homebuyers.
   4. Rent-to-own scheme.

1. To allow EPF measures that are more comprehensively targeted for home ownership: 
   1. Allowing monthly contributions to go towards the monthly repayment of housing mortgage to alleviate first time homebuyer’s financial commitments, with built-in measures to ensure homebuyers do not abuse the facility.  
   2. In Sarawak where the general income is lower, EPF can step up to provide loans up to five times of monthly income to assist first-time homebuyers to make down payment for their housing.

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