The Khazanah Research Institute (KRI) posited that in Malaysia, median house prices were 4.4 times median annual household income in 2014, which is considered an unaffordable housing market according to global standards. Although our housing is nowhere near the sky-high levels of that in Hong Kong or Singapore, an affordable market should have a median multiple (median house prices as a multiple of median annual household income) of 3 times.
Does that mean you take your annual salary and multiply it by 3 times and that’s the amount that you should be able to afford to pay for your home? Many would say that is almost too utopian and unrealistic, especially in today’s circumstances, so here are our top 5 strategies in order to score a worthwhile home that won’t break your bank.
Affordable Housing Schemes in Malaysia
If you are a first-time home buyer, there are many programs and schemes available to assist you in owning your own home. There’s Bank Negara’s RM1 billion Fund for Affordable Homes to assist home buyers from the lower income group to finance their purchases. The Fund extends to those with a monthly household income of RM4360 buying their first home priced up to RM300,000. If this applies to you, you may contact participating financial institutions including AmBank, Bank Simpanan Nasional, CIMB Bank Berhad, Maybank and RHB Bank. For more information, check out their poster here!
The Home Ownership Campaign, now extended to 31 December 2019 is a joint effort by the Housing and Local Government ministry (LPLT) and Real Estate and Housing Developers’ Association (REHDA) with a focus on stamp duty exemptions on Memorandum of Transfer and loan agreements. There’s also the First Home Deposit Funding Scheme (MyDeposit) and Youth Housing Scheme available to those who meet the pre-requisites. Do check if the property that you intend to buy is eligible for these programs.
Under the My First Home Scheme (Skim Rumah Pertamaku), many banks also offer home loans with 100% financing for first time home-buyers. This is, however, on condition that the applicant’s gross monthly income does not exceed RM5,000 and the total household’s gross monthly income does not exceed RM10,000.
Choose A Reputable Developer
There’s no reason to compromise on quality or reliability when it comes to purchasing an affordable home. Under various governmental policies and urging, more private developers are building affordable housing to meet current demand. Before you sign on the dotted line, do be sure to check if the developer is an established one with many years of experience building homes and have a good track-record for delivery quality. Visit their website to see what sort of projects they have developed and the where the projects are located at.
It comes as no surprise that the closer a property is to the city center, the higher it will cost you. While there are advantages in living close to the city, there are also many alternatives. With new expressways, public transportation expansion such as the extension of MRT and LRT lines, locations that were considered far before are becoming more attractive because of enhanced accessibility and connectivity. An affordable home in Malaysia should still come with decent public amenities, adequate security and a reliable transportation network for your daily commute.
Land is costly, but space isn’t. It goes without saying that landed properties fetch a higher price in the same location as high-rise residential units. Modern technology and advances in building techniques and interior design have enabled cozier spaces to accommodate families while still being practical. You can still get decently-priced 2 to 3-bedroom family sized condominiums that come with a host of communal spaces and conveniences for your active lifestyles with some due diligence.
If you can’t afford the home you intend to purchase on your own, consider sharing it with a family member, either as co-owner or guarantor. This will enable you to fetch a higher financing amount although it doesn’t increase the margin of finance that you may be able to borrow. With the help of automated loan calculators on consumer housing portals and bank websites, you can estimate the amount you’ll be able to borrow and even get a pre-qualification to apply for such loans.