With all of our recent article on the ‘rent generation’, the Malaysian central bank, Bank Negara Malaysia decided to curb criticism by publishing a document that is supposed to explain why houses are not affordable in Malaysia!
After a long winding explanation with some mathematical elements which it called facts, the central bank simply meant to tell the Malaysians houses were expensive in the country.
That would also mean to say people could not afford those houses because of their poor salaries that did not increase in most cases.
However, it gave the following points:
1. loans are approved at 73% thus – supposedly – debunking the theory that most people are not getting loans to buy a house.
If this first theory was a proven fact, then why are people still not getting their own houses easily?
The 73% approval rate is for people who have all the required documents that were initially approved by the bank, which is part of the screening process before the loans are approved. Thus the figures are hiding the true picture, that is the number of applicants rejected at the screening process imposed by BNM itself.
Meaning that, if the bank themselves said that your document cannot be accepted, it would mean that your loan application was not even applied for.
The reason why this happens is that of the stricter rules and regulations that Bank Negara themselves put in place.
On point number 2, affordable housing was still available in 2014 as they were priced at between RM160,000 to RM250,000 said BNM.
This may somewhat be true, but the “affordable” housing would be located at locations that would not be easily accessible or accepted by the rising middle class.
Some of these ‘flats’ are dodgy at best, with a lack of sufficient facilities and amenities as well. And if they are near such facilities, it is the growing flux of people and traffic jams in the area that is a real turnoff.
Just only 3 years apart and with that amount of money, one could barely afford a studio apartment on the outskirts of Kuala Lumpur. Which leads us to the third point made by BNM, that is there is a lack of supply of affordable housing in 2016.
What is the definition of affordable homes by Bank Negara? Those RM250,000 homes are actually low-cost homes, with subpar amenities as mentioned above.
A few years ago, houses for sale for RM500,000 and RM600,000 were considered as affordable and in 2017, houses worth RM1 Million is touted to be affordable. Which means you literally need to be a millionaire to be able to afford an affordable home… is it right?
Even studio apartments in Kuala Lumpur would cost upwards of RM500,000 and above, with or without a room.
Yes, house value increase is always a positive thing, it means that the city’s value is increasing. The salary of the citizens would not be able to pay for it though, since both parents would need to work in order to live a comfortable lifestyle, thus no one is around to raise their children properly. This creates other psychological problems in the society, disregarded by the figures thrown out by the central bank for example!
If memory serves us well, in 2014 houses were not affordable even for people who were earning RM6000.
Even Bank Negara Malaysia said themselves that people earning RM8,000 and above are in the high-income earner category. That shouldn’t even be possible as they literally can’t afford an “affordable” RM 1 Million house!
Furthermore, the average worker would not dare apply for a loan because the cheapest house available on the market in areas where facilities were available were already priced above RM500,000.
Some were above RM600,000. These were then called ‘affordable’ by the developers.
In 2016, a Minister suggested that housing developers start giving out loans because people were finding it difficult to get loans. This shows you the extent of the problem and the reality of the country, where a rent generation is being encouraged, nonetheless.
This also shows that there is a problem with loans from banking institutions despite the Bank Negara efforts to prove the contrary.