Navigating the unattainable homeownership dream

Every person growing up is often nurtured with two main aspirations: starting a family and owning a home to settle down in.

The former is often seen as a matter of fate or one of life’s mysteries, while the latter’s conclusion appears predetermined, barring any divine intervention.

So, why are property prices in Sarawak soaring to such absurd heights?

This is the burning question on everyone’s minds, especially for those in their late twenties and early thirties like myself.

These individuals have toiled for years, believing they had the financial means to invest in their first property, only to be flabbergasted by the exorbitant prices they are faced with.

Looking at the average house prices, it becomes clear that even the ‘decent’ ones start at over RM350,000, with ideal homes easily doubling that amount.

My definition of ‘decent’ extends to properties located within or just outside the city, offering reasonable commute times and manageable traffic.

On the other hand, ‘ideal’ homes are nestled in safe neighbourhoods with convenient amenities, representing a significant upgrade.

While the figure of RM350,000 might seem abstract, when calculating the monthly commitment over a 30-year loan period at a 3 per cent interest rate, it translates to a monthly instalment of approximately RM1,475.

The minimum wage in Malaysia, as mandated by the government, stands at RM1,500 per month, leaving a net salary of around RM1,300 after deductions.

After perusing financial advice websites, it’s apparent that the general recommendation for mortgage affordability is the 30 per cent rule, implying that mortgage payments should not surpass 30 per cent of a buyer’s gross income.

Applying this rule, affording a ‘decent’ home would necessitate a minimum income of RM5,000, or more precisely, RM4,916.66.

For a university graduate starting in an entry-level professional role, such as an administrative officer (pay grade N41) with a base pay of RM2,080, it would take them 13 years, with annual increments of RM225, to reach the income level required to afford the aforementioned house.

The scenario differs in the private sector, where annual increments are not guaranteed. This means individuals might work for years without a salary increase.

Career trajectories vary, with some individuals earning more through promotions or job changes, thereby affecting affordability. Some might even allocate a substantial portion of their income towards mortgage payments, depending on their choices.

The crux of the matter lies in the escalating trend of unaffordable homes. There is a prevalent saying on social media related to property listings: “mampu tengok” (can only afford to look), rather than “mampu milik” (affordable).

If unaddressed, the gap between salaries and home affordability will only widen, potentially leaving a significant portion of the population effectively ‘homeless’ in terms of property ownership.

The solution lies in establishing safeguards to maintain the affordability of housing. While the government is under pressure to construct affordable housing, there is a lack of clear mechanisms to tackle or prevent price inflation.

Enforcement measures, akin to those regulating essential goods pricing, must be implemented. This requires the initiation of a legal framework and its corresponding mechanisms.

Additionally, more housing loan assistance programs should be introduced, with existing ones offering flexible terms.

Imposing conditions that necessitate homes to be priced below a certain threshold is futile when realistic options are scarce in the market.

The views expressed here are those of the writer and do not necessarily represent the views of the Sarawak Tribune.