The government recently launched the housing scheme to enable young adults aged up to 35 and earning less than RM3,000 to obtain 100 per cent financing to buy houses worth between RM100,000 and RM220,000, and with a repayment period of up to 30 years.
The government, through Cagamas Berhad, will bear the initial 10 per cent deposit fees to purchase a house.
Government employees will also be able to borrow up to RM450, 000 for housing loans, up from RM360,000 previously.
The PAS strategist warned that the scheme, seen as a populist move, was little more than a short-term fix to spiralling property prices and would expose the public to more financial stress.
“Quite paradoxically Malaysia is facing a housing crisis while the property development sector is enjoying a boom. Why?
“Property prices are so high while suitable homes are out of reach of most Malaysians especially for young people, graduates, non-graduates looking to invest in their first home,” said Dzulkefly.
“What could a young adult with RM3, 000 afford monthly?” he told reporters during a press conference.
Dzulkefly pointed out that the Credit Counselling and Debt Management Agency (AKPK) had already reported a total of 50,361 cases in debt management programme, with 10.6 per cent unable to service their credit card debt and 74.3 per cent facing problems repaying loans.
“It must be categorically said that buying a house and being able to service instalments are two different things altogether.
“Anyone could afford a house with zero-down payment easy credit scheme but surely not many are eligible the fact that they could not service the monthly instalments over the long run,” he said.
He added that lending money to those not financially equipped was reckless as they will become high-risk borrowers who cannot actually afford the properties they end up buying.
“Getting 100 per cent financing does not mean that these buyers have no cost to bear. They will have to pay the usual legal and transfer fees, which could be quite hefty for low-income earners,” he said.
The property market was reported to have shown signs of cooling towards the end of last year due to oversupply and tightening measures on investment with prices for both commercial and residential property, especially in the high-end segment, experiencing a dip.
ECM Libra also reported that residential and non-residential property loans, which accounted for 44 per cent of loans growth in 2010, are showing signs of growth moderation.
Residential loan approval contracted 3.8 per cent year-on-year in December last year while non-residential loan approval slowed to 30.2 per cent from 47.3 per cent in November.
The United States subprime crisis, which helped usher in the ongoing global financial crisis, was caused by the widespread availability of predatory loans that were hit by high default rates once the US property bubble burst around 2007.
Low interest rates coupled with loose terms and conditions, such as no downpayment, had encouraged borrowers to assume mortgages that were larger than what they were able to service once the property bubble burst.
Prime Minister Datuk Seri Najib Razak denied any risk of a US-style subprime crisis here as Bank Negara would provide strict supervision and ensure that banks would not over-lend.
