Unhappiness among young adults over high property prices could result in social upheaval and possibly even impact election outcomes despite a government move to launch affordable housing schemes.
More and more young adults who comprise a growing portion of the electorate are putting off buying a house and say that property prices have reached a point where it could result in lower standards of living and impact productivity due to the need for long commutes or young adults leaving for higher paying jobs overseas.
Property prices have not been used as election issues in the past but have become a lightning rod of discontent across the Causeway where the opposition has used it to garner popular support in last weekend’s Singapore general election.
Twenty-something KL media consultant Angela Ooi, who called her cohorts “the homeless generation or urban sprawl generation”, said she gets the impression that the government is more concerned about Gross Domestic Product (GDP) figures and not the predicament of young adults.
“Does the government really care or are they OK as long as they enjoy a flow of revenue from property development and the economy is active?” she asked.
And while she doubted it will emerge as a major election issue here, she would definitely welcome it if a politician would bring it up.
“I would be very happy if any MP raised this issue,” she told The Malaysian Insider.
But Prime Minister Datuk Seri Najib Razak announced last Friday the government will launch an affordable housing scheme for houses below RM220,000 under a public-private sector partnership. He did not give details but said it would be launched in June or July.
Najib’s announcement came after the National House Buyers Association (HBA) warned that an entire generation of young adults risk being locked out of the property market due to runaway house prices.
HBA secretary-general Chang Kim Loong said the rapid inflation of assets has put house ownership beyond the reach of young adults.
“The prices are exorbitant and beyond the reach of young adults,” Chang told The Malaysian Insider. “The price increases are not commensurate with salary increases. How are young adults going to catch up (with house prices)?”
A young adult accountant with a multinational in KL who wanted to be known as Rais said that he feels house prices have been manipulated and become prohibitive, even for professionals, and the property sector should be more socially oriented and less profit motivated.
“Imagine my generation not being able to afford a home,” he said. “If people are riled up, then yes, it can be an election issue, depending on how it is argued.”
Pavilion shopping mall in Kuala Lumpur. Cities could lose their vibrancy if the young generation have to live far away or work overseas.
One 29-year-old tuition business entrepreneur, who only wanted to give his first name of Amin, said that he finds property prices in and around the city very expensive and “beyond reach” except for Bukit Antarabangsa which had been hit by sensational landslides in the past.
He said property prices were overshadowed as an election issue in Malaysia due to other matters such as corruption but noted the similarity of complaints between Malaysians and Singaporeans over the impact of foreign buying.
“In Singapore corruption has been sorted out and now the big election issue is how to bring things back for the locals,” he told The Malaysian Insider. “I think property prices have gone up a lot in Malaysia due to foreigners. Who is Malaysia for?”
Another twenty-something multinational accountant in KL who gave his first name Patrick said that more and more of his friends have put off buying a home due to the cost.
While he managed to recently purchase a 600 plus sq ft condo about 15km away from the city centre for about RM550 per sq ft, he said that he would find it easier as a local who can fall back on his parents while other young adults may not be so lucky.
“In the coming years it will be a big issue if youth cannot afford to buy a property,” he said.
“They’ll either have to squat somewhere or work overseas to earn enough money. We need the government to be pro-active in providing good quality housing.”
He agreed with Amin however that housing as an issue has so far been overshadowed.
“We as a country have so many other issues such as finding good jobs; those are the primary issues,” he said. “The problem now is the awareness of the cost of property.”
He noted that the cost of property could lead to a generation deep in debt and questioned the demand for high-priced property.
Noting that reports put the percentage of the tax-paying public at only about 10 per cent and the taxable threshold is less than RM3,000, then it could mean either about 90 per cent of working Malaysians earn less than RM3,000 or there is a massive case of tax evasion.
“If the bulk of people earn less than RM3,000 and prices of property are so high and keep going up, that will be a big issue,” he pointed out.
Patrick also said that if property prices absorb an increasingly large percentage of a person’s income, it will lead to a lower standard of living.
“People will have to keep eating at the mamak and more and more cannot survive on one income,” he said. “There will be a lot of anxiety and it’s very scary to think about.”
Housing and Local Government Minister Datuk Chor Chee Heung told The Malaysian Insider that the fear that young people feel of being price out of the market and therefore having to buy a home quickly was “unfounded.”
“Don’t rush to buy a house now,” he advised. “Once the KL MRT is ready, there will come a time when it will be affordable for someone with five years’ experience to afford a house.”
He also said the government was in “the early stages” of forming a national housing board to build public housing in a more structured and streamlined manner.
Asked if he saw affordability of property becoming an election issue, he replied that “some politicians may use it.”
Real Estate and Developers Association (Rehda) president Datuk Michael Yam said house prices needed to be looked at holistically and suffered from cost push factors such as rising land costs and building material costs.
He also said that KL was becoming a global city and prices were going up to global levels.
“I was recently in London and saw a friend’s daughter’s new apartment in Chelsea which cost about £360,000 (RM1.8 million) before subsidy for 300 sq ft,” he told The Malaysian Insider, saying that people will have to get used to buying smaller apartments in line with trends in developed nation cities.
Yam added that landowners in KL were “asking the sky”, which pushed up the land replacement costs for developers.
He denied perception that foreigners were pushing up property prices, saying that he has statistics showing that foreign participation in Malaysia was minimal.
The Rehda chief noted the costs of social responsibility and cross-subsidies such as low cost housing requirements and Bumiputera discounts and “indirect taxation” such as cost of sewage infrastructure affected the prices of houses to the end consumer.
“Five years ago, low-cost houses cost RM52,000 but are sold at RM42,000,” he said, adding that the difference between the cost and selling prices was probably higher now.
He agreed however that KL could lose some of its economic vibrancy if young adults were forced to live in distant areas outside the city.
“The wealth of a city is in its people,” he noted.
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