RM7,000 monthly income still not enough to buy homes
[size=100%]GEORGETOWN, Oct 15, 2014: Many may feel that those earning RM5,000 a month can live life comfortably and even purchase their own homes.
Those earning such an income would typically be professionals such as lawyers, managers and lecturers.
It is usually the low-income earners with a salary below RM1,500 who lament the difficulty of owning a home.
However, the cost of living today shows that even an income of over RM7,000 does not a guarantee the ability to own a house.
It is even possible that middle-income earners would be renting for the rest of their lives due to the exorbitant prices of houses.
These are among the concerns voiced by Dr Nor Malina Malek, dean of the School of Social Sciences at Universiti Sains Malaysia when sharing the findings of her research on home ownership among the low- and middle-income earners in Malaysia.
Despite being a basic necessity, the house prices in Malaysia has soared to a point bordering on ludicrousness, she noted.
The sharp jump in house prices over the last two years has even created a generation who simply cannot afford to buy a home.
A three-bedroom two-bathroom apartment of not more than 1,000 sq ft (92.9 sqm) in the outskirts of town today costs over RM245,000.
Even if the bank approves of a 90% of full loan to finance the house, the monthly loan could cost the borrower his entire month’s salary.
“The situation is even more severe in places like the Klang Valley, Johor Baru and Penang.
“I say ‘severe’ because 40% of city-dwellers are middle-income earners”, said Nor Malena, who conducted the research with Dr Azrina Husin, a senior lecturer from the same school.
Aside from exorbitantly-priced houses, “spending indiscriminately” is one of the issues raised when discussing obstacles to home ownership.
However, Nor Malina said many did not approach the subject from the “disposable income” aspect.
The RM7,000 may seem like a big figure but when the costs of living is factored in, owning a home seem less like a viable option. Their monthly salary also makes them ineligible to buy low cost houses.
In her 2010 research, Nor Malina explained that the Urban Well-being, Housing and Local Government Ministry’s requisite to purchase a low cost house was a monthly household income of not more than RM1,500 a month.
To buy a medium cost house, the monthly household income cannot exceed RM2,600.
She said the government had previously focused on helping the lower income group by coming up with low cost housing projects.
“The middle-income group is rather neglected. A RM7,000 salary may seem grand, but how much is left after the monthly expenses have been deducted?”
For example, childcare costs in the city is at least RM250 a month. If one has three kids, and then has to pay transportation fees of RM90 per child, how much would that be?
There are also school expenses, car loans, study loans, the EPF (Employee Provident Fund) contributions and daily expenses.
“After all those costs have been deducted, the net disposable income may be far less. How could they save for a house? Whether they like it or not, they have to rent – perhaps for the rest of their lives,” said Nor Malina.
Nor Malina’s research shows 85.1% of the respondents could only afford houses within the range of RM50,000 to RM200,000.
It is nearly impossible to find a house with that price tag in big cities, while those that are may be small in size or located in a less than desirable neighbourhood.
This clearly shows that the need for low and medium cost houses in the cities are still high.
Real Estate and Housing Developers Association (Rehda) estimates the average demand for homes in Malaysia is 150,000 units a year. This is based on population growth and household formation.
The research involved 400 respondents from four states namely Selangor, Kuala Lumpur, Penang and Johor.
Nor Malina said the spike in housing prices is inevitable, given the rise in real estate value and building material prices.
This is also due to the rapid urbanisation rate, which is expected to increase to 75% by 2020, following the mass migration from rural areas to the cities.
To address the issue, the government has launched several projects such as the 1Malaysia Housing Programme(PR1MA), the Public Housing Programme and the Private Affordable Ownership Housing (MyHome) scheme.
However, many of the housing projects are located far from the city or work places of the target groups.
This is despite the fact that research shows location is the second most important factor in home ownership, after pricing.
Some 27.5% of respondents favoured the location of a house rather than the physical and social aspects of it.
“They would rather rent than face the stress of a lengthy commute and high fuel costs.”
Nor Malina said, at between RM100,000 and RM400,000, the cost of the PR1MA homes were not that affordable for middle-income earners.
“Even a RM200,000 home would be out of their reach. Research shows that only 15.1% of middle income earners can afford home priced above RM200,000.”
She added that the housing issue placed a huge emotional burden on city dwellers and has to be addressed promptly.
“There needs to be a thorough research that looks into a household’s disposable income and financial capacity.
“If the need for affordable housing cannot be met, people will become resentful and frustrated because of the inability to access a basic need and to maintain their family’s wellbeing.”
Read more: http://www.therakyatpost.com/business/2014/10/15/rm7000-monthly-income-still-enough-buy-homes/#ixzz3GOL7PeGm | 
Post time 17-10-2014 05:05 PM
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