Pandemic or not, having a home is a necessity that we all need. Some prefer to rent rather than purchasing their own home, while others prefer to own a house. Now that property prices in Malaysia are seeing a decline, you may be wondering whether you should consider purchasing a house while the interest rates are low?
Based on The Malaysian Reserve report, the latest PropertyGuru Malaysia Property Market Index revealed that the overall asking prices for properties nationwide has dropped by 0.84% quarter-on-quarter and 1.79% year-on-year in the first quarter of 2021.
Centre for Market Education fellow and Bait Al-Amanah economist Fariq Sazuki said in the report that the implementation of MCO 3.0 could cause similar effects on the property market as MCO 2.0 since the property industry has not experienced a significant recovery after the first Covid-19 outbreak in Malaysia started.
He added that there is an expectation that low-income earners would prefer using the extra ringgit saved from paying loans on essential household expenditures, while wealthier individuals will take advantage of low-interest rates to buy properties.
If the thought of purchasing a house has crossed your mind, there are two options for you to consider: seeking assistance from the Ministry of Housing and Local Government (KPKT) or applying for Islamic home financing from banks or financial institutions with the help from Shariah advisors.
KPKT or Shariah advisors: which one should you seek assistance from when it comes to purchasing a home?
One of KPKT’s major roles and functions is to provide affordable housing. The ministry also has a portal called TEDUH, which is a national housing department portal. The portal displays information and search functions related to public and private housing projects and programmes in Malaysia.
It serves as a one-stop centre for individuals who want to apply for housing programmes under the supervision of the KPKT National Housing Department. Through the portal, you will find at least four affordable housing schemes (Skim Rumah Mampu Milik) on offer. The schemes include the following:
PPAM PPAM is an affordable housing scheme for government servants. It allows them, especially those from the low and middle-income groups, to buy a house located in major cities at prices cheaper than the market price. Under PPAM, the housing prices range between RM90,000 and RM300,000 per unit.
SPP SPP is a scheme that provides loan facilities to the low-income group (non -Government employees or retirees) who still do not own a home. The scheme will finance the cost of building their own house. To be eligible for this, you and your spouse must be Malaysian citizens aged 21 to 70 years old. Your total gross household income must be between RM1,000 to RM3,000 per month, and owns land or has land belonging to immediate family members. The maximum loan limit for SPP is RM60,000 (excluding insurance coverage); and the maximum loan repayment period is 35 years or up to the age of 70 years. There will be a 2% service charge on loans.
PPR Dimiliki PPR Dimiliki aims to provide the low-income group with the opportunity to own their own home. under this scheme, the houses are sold at RM35,000 per unit in Peninsular Malaysia and RM42,000 per unit in Sabah and Sarawak. To be eligible, you and your and spouse must be a Malaysian citizen aged 18 years and above with a household income below RM3,000 per month; among other things.
PPR Disewa PPR Disewa is a scheme for the resettlement of squatters. It also aims to meet the housing needs of the low-income group. Under this scheme, the target groups (low -income group and squatters) would be able to rent a home at a rate of RM124 per month. To be eligible, you and your and spouse must be a Malaysian citizen aged 18 years and above with a household income below RM3,000 per month; among other things.
If you are NOT eligible for any of the government housing schemes listed, then your best option is to apply for Islamic home financing from a bank or a licensed financial institution. For these financing products, they are also under the supervision of Shariah advisors – mainly those from the Shariah Advisory Council (SAC).
Among their duties include the following:
To ascertain the Islamic law on any financial matter and issue a relevant ruling;
To advise the Bank on any Shariah issue relating to Islamic financial business, the activities or transactions of the Bank;
To provide advice to any Islamic financial institution or any other person as may be provided under any written law; and
Such other functions may be determined by the Bank.
As a potential homeowner, it’s your responsibility to consider which option is the best one for you based on your needs and income. If you meet the criteria for any of the government’s affordable housing schemes, you may start researching for more information and contact the relevant party.
However, if you are not eligible for any of the schemes, you may seek out advice from a Shariah advisor before applying for Islamic home financing. They may provide useful information and insights that could be in your favour.