It’s getting way too costly to own a home

The Star Online: OPINIONS: Friday October 1, 2010


SOURCE: http://thestar.com.my/news/story.asp?file=/2010/10/1/focus/7140931&sec=focus

It’s getting way too costly to own a home

AS I will be getting married next year, I have been looking forward to
owning my first home. However, it is really painful to witness the everincreasing
prices of houses which is outpacing my income growth.

Recently, I walked into the sales office of a new condominium project and
the sales person told me the developer is giving a special eight per cent
discount for units on the lower floors. The person told me that I only had
to put down two per cent to secure a mortgage, as they will report to the
banks the full price of the condominium, and give me the eight per cent
discount without the bank’s knowledge.

Coupled with ever higher loan-to-value ratio, it sure is a sign that the
market is now beyond the reach of most genuine home buyers.
Otherwise, why resort to such tactics to entice buyers to sign on the
dotted line?

This reminds me of the hey-day before the 2008 crash in Britain. Just
before the crash, British banks were lending up to 110% of the value of a
property. Any form of affordability test was circumvented by mortgage
advisors who encouraged buyers to “self-certify” their income levels to
declare an inflated income.

The whole of the UK was in a euphoria, and everyone was piling into the
“sure-win” property market. Mortgage repossession in Britain has
increased drastically in the past couple of years, probably causing ruin to
the lives of those caught out.

After looking at the property market in the Klang Valley, I am now more
inclined to rent my first home.

I can rent a nice house in a good area for RM2,000, whereas I would
have to pay RM4,000 or more to the banks if I were to buy a similar
property in the same area. Many people say renting is a waste of money.
I don’t see how paying double the rent amount to a bank to service the
interest is not a waste of money.

HAPPY TO RENT,
Petaling Jaya.

Related story: Is Buying or Renting better
http://www.starproperty.my/PropertyGuide/Finance/2139/0/0