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What house you can buy with RM3000 monthly income ?

You do not need to hire McKinsey consultants to advise Najib that RM3000 monthly income can only afford for RM100,000 flat unless your father is a minister who can fork out RM300,000 for your RM400,000 apartment.

The starting salary for fresh engineer is stagnant since 90s, but the house price rises up by three- or four-fold in the same period.

Property prices in Malaysia with GDP 7,500 per capita is ridiculous high, 90% people born after 80s cannot afford to own a house with their income.

Najib denies first home scheme is a failure

By Shazwan Mustafa Kamal
March 22, 2012

PETALING JAYA, March 22 — Datuk Seri Najib Razak today defended the viability of his administration’s My First Home scheme, saying that it had garnered a 36.6 per cent success rate so far.

The prime minister was responding to a question posed by a listener during an interview with Chinese-language radio station 988FM.

He denied reports that the scheme was a failure, saying that the success factor has been “significantly good.”

“Report is off the mark, according to Bank Negara success rate is at 36.6 per cent. Hundreds of applications are still under application by various commercial banks,” he said.

The PM also said the government was “assessing” the situation, and would implement measures to improve the scheme.

It is understood that the scheme, launched by Najib a year ago, has come to a grinding halt as banks are unwilling to hand out 100 per cent financing for property worth up to RM400,000 to applicants earning less than RM3,000 a month.

Najib however acknowledged the fact that most banks did not approve a 100 per cent loan for those earning below RM3,000 a month.

The National Homebuyers Association (HBA) had on March 9 labelled the My First Home scheme an “ill-advised” policy after it was reported that not a single loan application has been approved under Putrajaya’s home ownership scheme for low-income earners.

HBA honorary secretary-general Chang Kim Loong told The Malaysian Insider that setting a ceiling of RM400,000 under a scheme for “affordable housing” was “ridiculous and somebody must have told the prime minister the wrong facts.”

“It is obvious that our honourable PM was ill-advised by parties with vested interest on setting the price range of RM400,000 for income earners below RM3,000,” he said in an interview.

He said the association had run checks with banks and found that most applicants were those who had been blacklisted or lacked proper proof of income.

Chang said a 20-year loan of RM400,000 at the industry standard two per cent below base lending rate would require a monthly repayment of RM2,552, or 85 per cent of RM3,000.

He added that a 30-year agreement would still require monthly instalments of RM2,051 or 68 per cent of RM3,000.

The scheme’s website also states that to qualify for the programme, the repayment commitment cannot exceed 55 per cent of the applicant’s gross income.

He said that based on Bank Negara’s guidelines that loan repayments cannot exceed one-third of income, the ceiling for the scheme should be set between RM150,000 and RM180,000.

The prime minister announced in October when tabling Budget 2012 that the initial RM220,000 ceiling would be raised to RM400,000 as property prices continued to spiral.

The government had earlier said that a state-owned mortgage agency would put up the initial 10 per cent deposit required to purchase the houses.

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 HBA last year warned that an entire generation of young adults are at risk of being locked out of the property market due to runaway house prices.

The nkkhoo.com comment board with Facebook account.
Sugu says:

I am waiting for my PR1MA house from Najib. So I will vote for MIC since Hindraf is all gone.

Jessie says:

Good luck to you. Low cost housing will soon bring misery to residents. In one low-cost flats in Johor Bahru, residents (70% malays) refused to pay the month RM40 (yes, only RM40) maintenance fee. Tenaga therefore has cut the power supply to the common area (corridors, car park) and crime (car theft, snatch theft) has gone up at night when the common area is in total darkness.

Gerakan Penang wants affordable house at RM200K in Penang island.
They can make empty promise as opposition, but people are realistic that a decent condo in Penang would need at least RM300K. Gerakan better learn the simple economics of supply-demand and scarcity.

nkkhoo says:

Housing project makes 50% profit.

RM300K condo actual cost is RM150,000, therefore selling at RN200K is possible.

Ngayub says:

Sure, but the government will have to ‘compensate’ developers with something else. In other words, rakyat still have to pay to subsidise certain groups.

Anyway, I do not see any new development with housing unit as low as RM150K in Iskandar Johor. If you have inside info, let me know as I want to invest one in Iskandar Johor – sure got value once Little Red Dot’s population hits 6 million.

Zamree says:

Property prices in Johor will go up as Singaporeans are now coming to ‘invest’!

Fhineas says:

Singaporeans like you are renting out their HDB flats and use the money to pay for the installments of JB’s house that they could live in. That is why there are many Singaproeans now living in JB. Just look at the high number of Singaproe registered cars clogging the causeway every morning during rush hours. This will push the price of JB properties beyond young Johoreans who are in the middle income trap.

Nam says:

nkkhoo should pose this question to chor chee heung .

Azuan says:

Chor Chee Heung never fosuc on low cost housing in his portfolio. He chose to put attention on rubbish bin. So he better step down before next election!

Janice says:

The green tung sampah is a reminder to us that Chor CH is a failure.

Murugan says:

The new condos at JB’s Jln Abdulah Tahir (touted to be the ‘Bintang Walk’ of JB) Setia Sky88 and TwinGalaxy will cost at least RM700 per square feet.

niceguy says:

Here’s some factual points I got.

From StarProperty.
“Prime Minister Datuk Seri Najib Tun Razak had last July launched the first phase of 1Malaysia Peoples’ Housing (PR1MA) programme, under which residential properties priced between RM150,000 and RM300,000 would be developed.”

“PR1MA is specifically for first time house buyers and moderate-income Malaysians earning not more than RM6,000 monthly regardless whether they work with the government, the private sector, or self-employed.”

“Some 42,000 houses under PR1MA have been identified for 20 sites in the Klang Valley, Rawang and Seremban, and companies like Sime Darby Bhd, SP Setia Bhd and Putrajaya Corp have been invited to participate.”

“In the last budget announcement, the federal government also raised the ceiling price for first home scheme buyers to RM400,000 from RM220,000 with 100% loan financing and stamp duty exemption to promote home ownership among the middle-income groups.”

And from the SRP website:
Ciri-ciri dan Faedah Utama:
Pembelian rumah pertama (bergantung kepada kemampuan)
Pembiayaan sehingga 100%
Harta kediaman sahaja

Kriteria Kelayakan
Peminjam/Pelanggan Yang Layak
Warganegara Malaysia
Pembeli rumah pertama
Individu berumur sehingga 35 tahun
Pendapatan kasar peminjam/pelanggan perseorangan tidak melebihi daripada RM3,000 sebulan
Sah dalam jawatan dan bekerja dengan majikan yang sama tidak kurang daripada 6 bulan
Pembayaran balik jumlah komitmen tidak boleh melebihi 55% daripada pendapatan kasar bulanan

Harta Yang Layak
Harta kediaman yang terletak dalam Malaysia
Nilai minimum hartanah RM100,000
Nilai maksimum hartanah RM400,000
Dihuni oleh pemilik (pembeli mestilah menghuni kediaman berkenaan)

—————-
My comments:

55% of RM3000 is RM1650. I’m not a banker, so I don’t know how much you can borrow with RM1650 as monthly repayment. Interest rates can fluctuate; and age limit is 35 years-old for the borrower and repayment period is up to age 65.

So Najib should have consult some bankers to set the maximum level of loan and not pull out RM400,000 out of thin air. Big deal.

The minimum loan level is RM100,000. Why is people talking as if the loan must be from RM220,000 to RM400,000? And the above article is solely on RM400,000.

From the FAQ in the SRP website, it is found that a couple with each having not more than an income of RM3000 monthly is eligible. So the loan amount can be based on a combination income of up to RM6000. (So maybe Najib did not pull the RM400,000 out of thin air as I presumed.)

The main advantage of the scheme is 100% loan with zero down-payment. No need to wait and built up some savings in EPF to aid in reducing the loan amount.

Lastly, I think people are barking up the wrong tree. It is a loan scheme. If it failed, so what is so disastrous about it? It is not a scheme for building affordable homes.

nkkhoo says:

The income tax department data says 95% household income is less than RM3000.

How many fresh graduate new couple household income is RM6000?

Go find out local commercial bank loan scheme details before you give out academic talk for “syiok sendiri” purpose.

RM6000 gross income can afford you to borrow loan for RM 400,000 under the present loan limit set by Bank Negara?

Which commercial bank is able to lend out 100% loan to you?

niceguy says:

You finally got it right.

This loan scheme should be walloped almost immediately when it was announced, not after a year or so waiting to see who got loans.

While Bank Negara is encouraging financial prudence with RM50 tax on credit cards, car loans reduced, etc., this scheme is a surprise.

Personnally, I would not want to tie to a 100% housing loan with over 20 years repayment. It is telling me that this particular house is beyond my reach and not the time to buy it. It is not financial prudence.

Or is it the case that there are no suitable house to buy if we postpone till a later date (and save money for the downpayment), and all house prices will increase extremely beyond our reach if we don’t buy now, I don’t think so.

nkkhoo says:

Let the result humiliated the stupid policy maker.

niceguy says:

Arghh! I just realised the article is from Malaysian Insider – which is mostly stuffed with bias comments trying to masquerade as news coverage.

I would have then sieved through every sentences to make sure it is true or misleading before commenting.

No wonder I’m the only person here!

nkkhoo says:

Actually you do need to read any article to know what house you can buy with RM3000 monthly salary.

niceguy says:

How we earn and spend on our daily needs determine how much we can afford (or afford) to buy a house.

And we have to read widely to keep abreast of property prices. But last several paragraphs recopied below are just a waste of our time.

“Some reports have also estimated that property prices jumped from 5.9 times income in 1989 to 10.9 times in 2010.”
What and whose income we’re talking about? I think there are realistic progress in the past decades and majority of Malaysians are earning more than their parents.

“The Demographia International Housing Affordability Survey rates markets whose property prices are 5.1 times median income or more as “severely unaffordable”.”
It would also rate cars in Malaysia highly unaffordable when compare to other countries dollar to dollar.

“The HBA last year warned that an entire generation of young adults are at risk of being locked out of the property market due to runaway house prices.”
It is the young adults that are buying and speculating on the hot properties.

nkkhoo says:

Have you discounted inflation rate to calculate present value for money in your savings?

niceguy says:

“The prime minister announced in October when tabling Budget 2012 that the initial RM220,000 ceiling would be raised to RM400,000 as property prices continued to spiral.”

HBA honorary secretary-general Chang Kim Loong told The Malaysian Insider that setting a ceiling of RM400,000 under a scheme for “affordable housing” was “ridiculous and somebody must have told the prime minister the wrong facts.”

Question: Who would dare to dream of buying a RM400,000 double-storey house with household income of RM3000?

Answer: Young students that were taught that they don’t have to repay their scholarship loans and the Government will write off their personal debts.

P.S. I wonder why Chang made 20-30 years loan examples when I heard that banks give out 40-year loans.

niceguy says:

I sometimes think the Kelantanese are wiser than most people in other states.

New developments can be lopsided against a segment of the public; and they can be thrown into economical turmoil unknowingly; waking up one day to the reality that you could be driven out by high prices and must relocate to survive.

Is this rapidly happening in the island of Penang with limited land?