Chang Kim Loong: Affordable housing: How to own it?

Excerpt:

'HBA has consistently called for government intervention to prevent a “homeless generation of young adult Malaysians” from emerging, especially in urban and sub-urban areas, who, if not for wild speculation, would have been able to buy their own houses.

In the Government’s drive for home ownership, low stamp duties have been imposed to encourage first-time house buyers. But speculators have taken advantage of this to accumulate multiple properties and manipulate prices with housing developers.

There are three types of purchasers, namely:

• Necessity: Those who buy out of need (owner-occupied),

• Precautionary: Those who buy to hedge against inflation and for long-term investment, and

• Speculative: Those who buy to “flip” and make money against everyone’s interest except their own.

The less affluent, who constitute the majority of the population, have been marginalised, with those having more than others accumulating property far in excess of what they need.'

'DIBS

HBA says: We want our children to inherit our houses, not our housing loans

It’s naivety to accept the developers’ arguments to re-introduce the DIBS gimmick. It should be noted that Bank Negara had prohibited “any form of interest capitalisation scheme”.

The economic downturn is seen as a fresh opportunity for DIBS to be reconsidered and mooted by none other than Rehda, the trade organisation that represents developers. This time around, it says it’s only for “first time house buyers”

DIBS or any other permutation similarly “schemed” cannot be allowed to continue for the betterment of the housing industry as it risks creating a property bubble as property prices have been artificially increased and they create a snowball effect. This is especially so when the young, unwary and first time house buyers come on stream. They need more protection compared with seasoned players.

DIBS prohibition announced in Budget 2014 had been effective in curbing the unbridled escalation of house prices. DIBS must continue to be prohibited and outlawed and should not be re-instated in any form or substance.

Pay nothing to own a house?

DIBS is popular with speculators as they pay nothing to make a profit. The argument that purchasers don’t have to pay for anything during construction is specious: attractive to the naive buyers.

The expenses, in any form, incurred by the developer will eventually have to be paid back, by the purchaser with a “premium”. The increased amount ranging from 10% to 20% and some even as high as 25%, will have to be paid by purchasers in exorbitant instalments.'

Rest of article in The Star: http://www.thestar.com.my/business/business-news/2016/09/03/affordable-housing-how-to-own-it/

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