The acute supply and demand mismatch, and house price transparency must be address immediately
by NUR HANANI AZMAN / pic by HUSSEIN SHAHARUDDIN
THE issue of homeownership among the bottom 40% (B40) and middle 40% (M40) income groups must be dealt with by addressing the acute supply and demand mismatch, and improving house price transparency, not by financing alone.
Bank Negara Malaysia (BNM) Governor Tan Sri Nor Shamsiah Mohd Yunus said the central bank have always maintained that the financing model is a key component to support homeownership, with recommendations ready to address the matter.
“At the end of the day, most housing is still too expensive for many Malaysians. We need to address this as we embark on more innovative financing solutions.
“This includes dealing with the acute supply and demand mismatch in the housing market, improving house price transparency and ensuring a vibrant rental marketplace is in place for those who are not ready or do not want to own a house,” she told reporters after announcing Malaysia’s economic growth for the fourth quarter of 2021 last Friday.
Nor Shamsiah was responding to Prime Minister Datuk Seri Ismail Sabri Yaakob’s statement that BNM must review its financing model to facilitate house ownership for the B40 and M40 income groups.
She explained that banks had been highly supportive of homeownership. In 2021, banks approved more than RM60 billion for first-time house buyers.
Of this, more than 60% of new loans approved were for properties priced RM500,000 and below.
“On top of this, there are also numerous guarantee schemes in place to support homeownership, especially for the lower-income group, including Skim Rumah Pertamaku by Cagamas Bhd and Skim Jaminan Kredit Perumahan by Bank Simpanan Nasional,” she said.
She noted that things had changed since the outbreak of the Covid-19 pandemic, including realities around housing demand, hence financing models may also need to be adjusted. For example, as remote working becomes more common, prospective buyers may be more open to buying properties outside of the city centre.
“There are already rent-to-own financing schemes, and for those working in the growing gig economy with less predictable sources of income, improved access to alternative data such as utility bills and rental payments can be a source of credit assessment by lenders.
“This can be supported by an ecosystem that facilitates greater data sharing, not just among the private sector, but also government agencies whose recommendations were outlined in BNM’s Financial Sector Blueprint 2022-2026 published recently,” she added.
Meanwhile, Centre for Market Education CEO Dr Carmelo Ferlito said it would be good to have availability of data on homeownership for B40 and M40.
“I would expect the BNM governor to know that pushing on innovative financing with the purpose of supporting homeownership will have the consequence of increasing Malaysia’s household debt, which is, as a ratio of GDP, the highest in Asia.
“In simple words, pushing on more financing solutions means pushing for the financial instability of the rakyat.
“This in turn increases the fragility of those segments of the population who, because of their income, already have less savings available and therefore less shields in moments of crisis,” he told The Malaysian Reserve.
He opined that we should stop thinking in terms of homeownership and push more for social mobility, and eventually for rental support solutions which can help social mobility. “BNM should operate on a different level and be the guarantor of money stability, which means inflation below 2% to preserve purchasing power.
“As inflation is rising, instead of homeownership, it would be good if BNM would be able to guarantee price stability,” he added.
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