Easing housing loans may further burden the poor, govt told

 

A property expert has warned that easing financing schemes for low-income groups might result in the exacerbation of their financial distress. (Bernama pic)

PETALING JAYA: A  public policy expert on housing has questioned the wisdom of reviewing financing schemes to make home ownership more affordable for low-income earners just to reduce the property glut.

It would “not be smart” to do so, Khazanah Research Institute research director Suraya Ismail told FMT.

She warned that easing financing schemes for low-income groups might result in the exacerbation of their financial distress.

Suraya said income and house prices were not the only determinants of loan approval, adding that buyers’ debt commitments were also a key factor.

Suraya Ismail.

“Each bank has to perform due diligence” with regard to these factors, she said. “The rejection of loan applications may indicate that these potential buyers may be over indebted.”

Recently, Prime Minister Ismail Sabri Yaakob said Bank Negara Malaysia should review its financing model to make home ownership easier for the B40 and M40 groups. He said this would ultimately reduce the property overhang in the country.

In a recent report, the National Property Information Centre said houses priced at RM300,000 and below accounted for a major share of overhung properties.

Suraya said the affordable price range set by the government probably did not meet targeted buyers’ financial capabilities.

She said house prices should be set according to the affordability thresholds of the local populace in any given area.

“When prices of homes are already generally unaffordable, the means to improve the situation should be based on making the supply of housing more competitive,” she said. “Prices must follow the incomes and demand of local communities, as observed in competitive markets.”

Anthony Choo.

Melaka-based property developer Anthony Choo criticised the housing incentives and campaigns offered by the government, such as the home ownership campaign, saying they had failed to address the overhang issue.

He urged the government to take another look at the current policies governing these incentives.

“Are these incentives and campaigns really helping the house buyers, especially those in the B40 group?” he asked. - FMT