We have been more than a little unfair on young property buyers across the country. In fact, I believe we’ve royally shafted them.
When I say “we”, I mean the “collective we”; developers, politicians, banks, and yes, the media. Basically, I’m pointing the finger at all of us that should have had the maturity to foresee the awful predicament that we have now put them in.
Remember that feel-good era, not so long ago, when the market seemed deliriously healthy and we all chipped in to encourage younger members of the public to get into this wonderfully prosperous game of property ownership?
The Asian Financial Crisis was over, people were buying in abundance, prices were rising positively, and we – in our misguided wisdom – began to tell our youth that there is no time like the present to own a property. While the rest of the market was upgrading, we thought, who better to take up entry level homes than our young citizens? After all, aren’t we giving them a head-start in life?
So we banded together to reach out to them in a big way. We baited the fresh grads and the second generation urban dwellers leaving their nests, though the ink was barely dry on their first pay checks.
Developers began introducing schemes that were particularly attractive to them. Schemes that would defer payments for the first few years, or bear the interest of the loan during the development period, or offer low (or no) downpayment. We told them they could make the big payments later, in a few years’ time, when they would be more financially stable.
Banks told them that they would be able to take advantage of flexi loans, where they would only be required to pay a minimal amount in the initial years, and more later, when they would inevitably be earning more.
The government got into the action by unloading a host of initiatives and tax incentives for first-time buyers, telling them that all Malaysians should strive to put a roof over their heads and that the youth should secure their future now.
And then there were the journalists. We wrote scores of articles that encouraged them to take the plunge. More than this, we told them that it was the “smart thing to do” as youth was on their side. Longer bank loan tenures meant lower repayments, we said. Prices will be unattainable if you wait too long, we said.
Of course all of the above was sound advice, at the time. But times change, and the economy is as unpredictable as the weather. We should have known better.
Now the tune has changed somewhat. Now we tell our youth that they spend irresponsibly, that much of the country’s rising non-performing loans is on them, that they are high-risk loan applicants because they do not have much of a financial track record behind them.
To put salt in the wound, politicians are now saying that the young should “get a spouse before a house”. The truth is they probably can’t afford either.
All of this comes at a time when the economy is heading south. Those who took loans earlier are now feeling the pinch, because the years of paying less are over and it’s now time to pay more. DIBS may be outlawed, but those who opted for it are now at the deadline and are facing a significant rise in monthly costs.
Salaries have not risen significantly across the board and a slow economy means there will be no substantial improvement in livelihood in the immediate future. The burden has suddenly become too much to bear.
To be fair, the current “perfect storm” situation in the local economy is not one that anybody could have easily foreseen, but if we are going to put a conscientious effort into improving the situation, then the focus should be on generating innovative financing solutions that are designed to reduce the financial burden of our youth. Less effort should be put on “innovative ideas” that entice them to buy some more!
It does not pay to leave them in the current predicament, as this will lead to a rise in distressed properties, non-performing loans, and potentially, early bankruptcy for many of our youngest citizens. That’s not good for anyone.
The youth are the future of this nation, so what kind of future are we painting for ourselves?
Chris Prasad Managing Editor – Property360