Home ownership, property investment and the issue of housing affordability has always been a hot topic of conversation, especially among young adults who have joined the workforce. That is why we at Estate123.com have arranged for an exclusive online interview with Bank Negara Malaysia (BNM) on its Housing Watch initiative. In Part 1, we’ll start with a few questions to find out what the Housing Watch is, and how it can help house buyers in Malaysia obtain accurate information on buying property.
[Check out Part 2 of this Estate123 exclusive interview!]
Could you tell us more about the Housing Watch website? (www.housingwatch.my)
The Housing Watch was launched by Bank Negara Malaysia (BNM) in August 2017 to serve as a centralised information repository on the state of residential market development in Malaysia, as well as the key factors that influence the demand and supply of housing in Malaysia. The website also provides consumer aid to help potential house buyers plan for house purchases, including information on home financing assistance programmes.
Why did BNM launch the Housing Watch website?
As housing affordability remains a pressing issue in Malaysia, the launch of the Housing Watch website aims to provide regular and more comprehensive information on developments in the housing market and home financing by the banking system. This is to promote more informed public discourse on this issue based on accurate facts, balanced perspectives and empirical analysis. Additionally, the website also aims to educate potential house buyers on prudent financial practices to avoid being over burdened by debt obligations. This includes tools to assess affordability and information on policy measures implemented, as well as assistance programmes for first-time house buyers.
There are other websites offering information about the housing market already. Will BNM consider to collaborate with them in the near future?
The Housing Watch will complement information that may be offered through other sources, while serving to provide a credible source of information on the housing market. The Bank welcomes collaboration with interested parties to advance the intended objectives of the Housing Watch.
Latest statistics from DOSM (Department of Statistics Malaysia) show that Malaysians’ household income and consumer spending have increased, but does this have any impact on homeownership?
While the latest statistics based on the Household Income and Expenditure Survey 2016 indicate that Malaysians’ household income has increased, housing affordability continues to be challenging in Malaysia.
In 2016, given the median Malaysian household income of RM5,228, the median house price of RM313,000 was considered affordable. However, the prevailing market prices in key urban employment centres were beyond the means of what households can afford, especially in Kuala Lumpur, where the maximum affordable house price was RM620,000, RM523,000 for Petaling Jaya, RM384,000 for Johor Bahru and RM600,000 for Georgetown.
To improve homeownership, the mismatch between demand and supply needs to be addressed. In this regard, more affordable housing needs to be built, especially houses below RM250,000. For example, during 2Q 2017, only 32% of new launches were priced below this threshold.
Despite increased incomes and spending power, it seems many people still do not own a home, especially those in their 20’s and 30’s. Is it because houses are still not affordable, or buyers are picky over where they want to buy?
Purchasing a house is a major decision whether for an individual or a young family which requires careful consideration and planning. For those in their 20’s and 30’s, this demographic group is most likely to have entered the workforce within the last 10 years, in which during the same period, the trend of increasing mismatch between the supply and demand of affordable houses has been more prominent, particularly in key employment centres. This situation inevitably places greater challenges for these young adults to find a home within their affordability levels. Other factors would also include the location of the house and the amenities available in the area. For instance, buyers generally take into account the condition of the neighbourhood and its surrounding amenities such as the availability of education centres, medical services and recreational areas, proximity to employment areas, as well as the quality and accessibility by road or public transportation. Solutions to affordable housing must also take into account these factors in the planning and development of affordable housing projects.
There’s a Malaysian House Price Index (MHPI) section in the Housing Watch website. How will this, and the other statistics provided in the website, help first-time house buyers?
The MHPI, which is a measure of the overall change in house prices in the country, can be used as an indicator to gauge the overall direction of the residential property market in Malaysia. As such, potential house buyers would be able to benchmark the price of the property that they are interested in purchasing against the general developments in the residential market as a rough guide. Other statistics available on the website, such as the measure of housing affordability, can assist prospective homebuyers to base their property search to houses within the price range of their affordability levels.
Are the Home Financing Assistance Programmes listed in the website available for all homes within the pricing criteria, or only selected projects?
The home financing assistance programmes listed on the website are government-assisted programmes, which are generally targeted for first-time house buyers or the low to middle income groups. Except for the PR1MA’s Skim Pembiayaan Fleksibel (SPEF) which caters specifically for the purchase of PRIMA homes, the other schemes are open to all residential projects subject to the respective eligibility criteria of the schemes.
Want to learn more about the property outlook and housing trends in Malaysia? Keen to find out how to buy affordable homes via government schemes and incentives? The Q&A continues in Part 2 of our exclusive interview with Bank Negara Malaysia on the Housing Watch!