A home is a necessity. Owning one is compulsory, for everyone. Majority may not have enough within their EPF for their retirement but with a fully paid home when they retire, it will be huge plus point. This is why politics should be kept out and the genuine potential owners should be given as much assistance as possible. I generally support something similar to DIBS, as long as the authorities are able to track and enforce who could get it as well as potentially some limitations to the buyers who qualify. Seriously, if the person is thinking of buying to flip, this is not for him. Just stay out or go casino to gamble instead, it’s faster too.
Reported in a local media, Penang State Housing Committee chairman Jagdeep Singh Deo has proposed a few things for Bank Negara Malaysia’s (BNM) considerations. His first proposal include lowering the deposit required for affordable housing units. I think this has its plus point because I learnt that for many of the buyers for the very affordable units face problems in securing a loan. A developer once told me that he had to sell his affordable high-rise units by two times on average because the loan rejection rate is very high! For a project of less than 200 units, he had to sell it over 500 times! However, on a more rational note, I would advise the buyers to really only focus on those they can afford.
Second proposal is for banks to come up with preferential packages with a longer loan repayment period and lower monthly premium be offered to those applying for these affordable homes. Longer repayment periods, I think the banks would welcome it. They can also set some requirements so that the buyers are tied to them longer. The only issue is that the buyer may then be tempted to go for a more expensive unit instead since the monthly payment is already lower. If they do this, everything falls back to square one. Perhaps we wait for some comments from the banks themselves.
Last suggestion but I think the most significant one is to ask BNM to reintroduce the Developers Interest Bearing Scheme (DIBS) for affordable housing projects. Frankly, I think even if DIBS were to be allowed again, it should this time be only for first-time home buyers. Objectively, if this is available to everyone, the greed to flip for quick profits will come back to haunt the property market. Seriously, this time it may crash because this time, the number of interested buyers have grown tremendously versus many years ago. Unless of course every one of these affordable unit buyers are also only for first-timer.
I think these proposals are also applicable for secondary markets too, als ong as they are within the specified price range. In fact, it may be safer for the banks to do this for the secondary market as the valuation is already stable and not as unpredictable. If we were to ask anyone in 2012 about 2016, I do not think anyone would have expected 2015 to be bad and the potential for 2016 to be worse. Thus, predictions are always debatable but value of the secondary property is much more certain. Happy waiting, especially for first-time home buyers. This may be your ticket to a new home in future.
written on 2 Apr 2016
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