‘It’s more about income level, not pricing’
HAS the expectation of Malaysia’s failure to achieve high-income nation status by 2020 been, to some extent, the cause of affordable housing issues in the country?
In 1991, the government, led by Tun Dr Mahathir Mohamad, formulated a long-term national development blueprint under which Malaysia aspired to be a developed nation within 30 years.
The 11th Malaysia Plan (2016-2020), charts a path toward a high-income status, focusing on increasing productivity and innovation, as well as stressing the need for equity, inclusiveness, environmental sustainability, human capital development, and infrastructure.
It also seeks to raise the living standards of the Bottom 40 per cent (B40) income group, as well as reduce income and infrastructure gaps between rich and poor states.
Fast-forward to this year, and with just over one year to go before 2020, Malaysia is still a few steps behind the high-income status target, said Real Estate and Housing Developers’ Association Malaysia (Rehda) council member Datuk N. K. Tong.
The World Bank said recently that Malaysia is expected to achieve a high-income nation status at some point between 2020 and 2024.
To make this vital breakthrough, the country has to undertake some major reforms or greater socio-economic transformation.
The World Bank defines high-income economies as those countries with gross national income (GNI) per capita of US$12,236 (RM49,916.76) or more.
Last year, Malaysia’s average GNI per capita stood at US$9,660, just short of US$2,576 of the defined threshold level.
“The previous government promised to achieve a high income economy by 2020 but we haven’t got there yet. I think 2020 is too short a time frame now. The previous government had failed to get us to where we should be on the way to 2020.
“If we continue to reform, there is some potential. It is a question of income and not the pricing of the properties. If you look at everybody’s take-home (pay), at the end of the day after taking care of the basics, there is not much left,” Tong told NST Property.
Statistics Department data showed that Malaysian workers received average salary of only 35 per cent of the gross domestic product (GDP) in 2016. This included wages, bonuses and other income. Workers in China, Singapore and the United States enjoyed a higher share of
57, 42 and 43 per cent, respectively.
Singapore achieved its high-income status in 1987.
Tong, who is also Bukit Kiara Properties group managing director, said housing affordability issues in Malaysia are not about product pricing, but more about the income level of the people.
“The overall market is soft basically because incomes are not high enough. We have that vision of a high-income nation but we just haven’t executed it. There are many issues but these are a legacy from many years of the property industry being somewhat dysfunctional.
“In the current market where there are many affordably-priced properties and you still see slow take-ups, that’s got to do with the economy,” he said.
Meanwhile, Rehda patron and immediate past-president Datuk Ng Seing Liong said banks should not only depend house buyers’ payslip when approving a loan as their potential clients may have other income.
“If banks just look at their salary, then getting a loan to be approved with a 90 per cent margin is out of the question as their income level has either maintained or increased by only a small percentage in the last few years, while cost of living has gone up.
“A lot of people these days are doing second or third jobs, so they have more income to support their family. Banks should look at that when approving loan margin,” said Ng.
Source: NST
