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Challenges and Solutions for First-time Home Buyers

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Owning a house has always been one of the major goals for Malaysians. No doubt, having a roof over one’s head is one of the few requirements in life.

However, many first-time homebuyers especially fresh graduates or individuals under 30 are struggling to afford most properties within the Klang Valley.

Getting into the property market for the first time is undeniably a huge commitment. And it seems like the exponential high price to own a house remains to be out of reach for the common Malaysian. According to the report “Making Housing Affordable” by Khazanah Research Institute in 2015, the overall Malaysian housing market is “seriously unaffordable”.

What “affordable housing” means is aside being able to afford to buy a property, one also be able to maintain a minimum standard of living.

But with the rising cost of living such as food and petrol coupled with the rising property prices, the average household is finding it more difficult to stretch out their finances and to buy their own property. In 2016, Malaysia already has a household debt of 89.1% or RM1.03 trillion. Bank Negara too noted that housing affordability is a challenge.

One of the common challenges for most first-time home buyers is coming up with enough money for a down-payment. Most mortgage lenders require first-time buyers to come up with a down-payment of 10 percent of the final purchase price of a home. For a RM500,000 home, that is RM50,000. That is a lot of money for first-time buyers to come up with.

Saving for a deposit or down-payment is indeed a big challenge for first home buyers. It may take some time to obtain the amount needed, especially when there are so many other living costs.

Furthermore, a lot of first home buyers now have to look for areas they can afford to live in rather than the areas they want to live in. The current price excludes desirable locations that housing developers build on. Most of the housing projects will be either outside or on the outskirts of KL.

While it may seem gloomy for first-time house buyers, the key here is to do your homework.

Firstly, carry out some research on the developers. Of course, it is wise to buy from established developers with a good track record that deliver high quality homes on time.

But most importantly, many developers now offer good incentives and interesting promotion packages to entice sales. First-time homebuyers are more likely to find their dream home as developers are launching more affordable units. At the moment, developers are getting competitive with their product offerings and price points. So, this will be a great opportunity to take advantage of the attractive packages, discounts and other incentives that are being offered.

Secondly, search for a property that is surrounded with good infrastructure and connectivity. Many locations are equipped with as MRT stations, lines and highways now which can easily connect you to many areas. Thus, distance should not be an issue in this case. And if you are thinking of long-term, look for properties within well-planned townships that come with amenities and facilities such as hospitals, supermarkets and schools. Living in KL city may be great for your work but might not be idealistic for a nuclear family in which some may prefer suburban areas.

Thirdly, you can consider purchasing your first home under the PR1MA scheme. Designed to build affordable homes that are at least 20% less than market value, PR1MA is one of the most popular affordable housing projects that is aimed to benefit middle-income households.

Houses under this project come in various types and sizes and located in urban areas, priced between RM100,000 and RM400,000. The program is designed to suit different household needs. As of January 2017, PR1MA has 231 approved projects, comprising 266,400 units, nationwide.

Moreover, in Budget 2017, the government announced measures to help the property market, such allocating more funds to build affordable homes and increasing stamp duty exemption from 50% to 100% for houses costing up to RM300,000. The moratorium period will be reduced from 10 years to five years. This means you can rent or sell your property after the fifth year.

The monthly income eligibility to purchase 1Malaysia People’s Housing Program (PR1MA) houses has been increased from RM10,000 to RM15,000. The properties are offered via an open ballot which is drawing lots. To become a qualified candidate, you will need to complete a registration process and get a number. Thereafter, you can submit an application for balloting to the PR1MA property of your choice. 

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