KUALA LUMPUR, Feb 15 — The sight of newly-built condominium units right down the street from where he lives irks 24-year old Keoh, who says they are a symbol of something which he cannot afford.
The young man, who only wanted to be known as Keoh, carves a living as a fish trader and scoffed at the development within his neighbourhood in the fishing community of Jalan Bagan, Sekinchan. Costing RM500,000 a unit, he says the condominiums are an eyesore to him and those in his community.
“I stay with my parents. I work everyday, going to Perak in the morning to get my supplies of fish and drive a truck back here. But what have I got to show for it? I cannot afford to even buy a home in Sekinchan,” he told The Malaysian Insider.
“Even prices here are rising, and we are still earning the same. I do not think that any of my neighbours can afford a condominium like the one at the end of the road,” he said, adding that earning a monthly income of less than RM2,000 a month did not leave him much choice other than staying with his family.
Young adults, who are putting off buying a house, citing property prices as the underlying cause, are reflecting a growing trend.
Property prices have not been used as an election issue in the past but both coalitions have begun to realise its potential impact on young adults, who represent a sizable chunk of the country’s electorate.
The National House Buyers Association (HBA) last year warned that an entire generation of young adults risks being locked out of the property market due to runaway house prices.
Keoh previously lived in Subang, Selangor and worked as a mechanic for two years before financial constraints and family obligations brought him back to his Sekinchan hometown.
“I came back to help out the family business. Staying here, you’d think that the cost of living would be cheaper, but it is quite the opposite,” he said.
Twenty-seven-year-old Phillip Tay shares Keoh’s frustration. A biotechnology graduate-turned-marketing executive, he cuts a decent picture of the average middle-class graduate with a stable job and his own car.
“But the reality is, I cannot afford to purchase my own home. I live with my parents. After paying for monthly essentials, all I am left with is a little bit of savings.
“I think this is a frustration shared by many of my peers. We have jobs, some even professionals, but prices keep getting higher. We pay bills and more bills, and once we’re done with that there’s not much money left,” he told The Malaysian Insider.
Tay believes the root problem lies in stagnant wages versus an increasingly high cost of living, which is in turn reflected in the price of homes.
“What the government can do is to come up with policies that can help address the issue of stagnant wages. Prices are going up but wages aren’t. I’d vote for a government which can look into that,” he said.
Accounts executive Rachel Tan says that young adults today are so debt-laden that it becomes impossible for them to even think about owning property.
“Young working adults are stuck right now, there’s poverty of a different kind. There’s a lot more debt at this age ... someone my age already has so many loans to repay even before they can own a home, once they get out of university,” said the 23-year old living in Subang Jaya.
For pharmacist, Balqis Mohamad Zin, working with the government provides a better sense of financial security compared to working in the private sector.
But she too, like many others, is concerned about her future amid ever-rising living costs.
“The cost of property is very high, especially in urban areas. The cost of living worries me. Currently, I still get family support, but what if I get married in the future? What I am earning right now will not be enough.
“I am thankful to be employed, I know some people who are still unemployed after graduation. But where is my future from here? Financially I am concerned,” said the 25-year old.
Prime Minister Datuk Seri Najib Razak, in an attempt to address the issue of unaffordable property, introduced the 1 Malaysia Housing Programme (PR1MA), an affordable home ownership scheme late last year.
Najib initiated the first phase of PR1MA in July, which involves the construction of 42,000 houses on 20 strategic sites. Each unit will be sold for between RM150,000 and RM300,000 depending on location and size, and targets first-time homeowners with a household income of between RM2,500 and RM6,000.
The scheme is a continuation of the prime minister’s attempt to tackle soaring property prices in urban centres following the My First Home programme launched in March last year which caters to lower-income households with a budget of RM220,000 and below.
Not to be outdone, the Selangor Pakatan Rakyat (PR) government launched a Selangor affordable housing scheme last year offering apartments priced below RM100,000 to those who earn a monthly income of between RM2,500 and RM5,000.
But despite the vast array of affordable housing schemes available, the root problem of the high cost of homes still remains an issue, and looks set to prevail in the future.
There is also concern that low-cost housing schemes will have stigmas attached to them and therefore will be less attractive to homebuyers.
Property prices in urban areas such as Penang and Kuala Lumpur rose by up to 40 per cent in 2010 fuelled by low interest rates and a surge in speculative buying, although prices grew slower last year due to dampened sentiment from tightening measures such as a hike in the real property gains tax for early disposals.
Some reports have also estimated that property prices jumped from 5.9 times income in 1989 to 10.9 times in 2010.
The Demographia International Housing Affordability Survey rates markets, whose property prices are 5.1 times median income or more, as “severely unaffordable”.
The House Price Index (HPI), as prepared by the Valuation and Property Services Department, rose 7.5 per cent in the second quarter of last year as compared with the same period in 2010.
For urban centres like KL, to which young working adults are gravitating, the HPI has seen a rapid increase since 2004, growing relatively slowly from 100 in 2000 to 108 in 2003, before rising sharply from 115 in 2004 to 167 in the second quarter of last year.
“The prices are exorbitant and beyond the reach of young adults,” HBA secretary-general Chang Kim Loong told The Malaysian Insider last year. “The price increases are not commensurate with salary increases. How are young adults going to catch up (with house prices)?”
“It’s simple math. The combined income between me and my husband does not even amount to RM3,000 ... the realistic choice is to live with my family. Cheaper costs.
“For me, I will vote for a government that will continue to provide aid, to help us. It’s difficult living when everything has a price,” Yanti, a cook from Sekinchan concludes.