The Housing Scheme launched by the prime minister for young adults with low income to own houses priced RM100,000 to RM200,000 by paving a way for 100 percent financing, is portrayed as a noble goal.
In fact it merely addresses a short term issue of financing ,but not the underlying cause of high housing prices that is very much related to government failure to curb excessive speculation of prices, and the opening of this sector for foreign investment from countries like Singapore and Japan due to high demand for luxury homes.
This is regarded as far more profitable by developers,which creates land scarcity and in turn increases the price of property when many Malaysians are finding difficult to own a house,due to unreasonable prices.
The increased cost of materials for building houses have also made maximisation of profits from the purchase of the rich far more lucrative for developers.
The fundamental reality in Malaysia is, incomes of workers are low, medical and food prices are increasing and this has made many Malaysians going ideeply into debt, and this is evident from previous press reports of Star Property that states that household debt to gross domestic product ratio has increased from from 66.7 percent in 2004 to 76 percent in 2009, but estimated to ease to 74.6 percent at the end of 2010.
According to housing analyses the availability of cheap housing loans is the reason for the increase of household debt.
The fundamental question is, why is the government encouraging house ownership that merely resolves initial burdens of Malaysians, by excluding house downpayments but making them chronic debtors in the long run, in the context of rising prices of basic necessities, health care, low wages and impending interest rate hikes to curb inflation?
Is this not similiar to the subprime mortgage crisis in the United States that caused a global crisis which is still felt today?
Housing is a basic right of every person and the duty of the government is to provide such facilities for the people who can't afford it.
Merely addressing initial short term burdens or taking an incremental steps such as increasing the loan to value ratio, does not solve the fundamentral structural issues in Malaysia that basically favours the rich at the expense of the poor.
Malaysia should take heed from China where the government will spend US$200 billion to build low cost homes for its people which basically reins in the surging prices of houses besides spreading economic benefits to the middle income and the poor.
Though this does not solve the major structural flaws in the economic conditions in China, at least the government has a better grasp of the real issues, taking cue from the unrest in West Asia.
Therefore it is vital that the government addresses the issue of household debt by increasing the allocation for the building of reasonably priced houses that is within the reach of Malaysians of low income, rather than increasing the number of people with cumbersome debts in the long term.