PETALING JAYA: The stamp duty exemption for first-time house buyers can relieve some financial burden for young individuals, but other underlying issues such as low salaries, high interest rates and housing prices should also be taken into account, economists say.
Malaysia University of Science and Technology economics professor Geoffrey Williams said the move to exempt stamp duty for first-time house buyers was welcomed.
However, he said it only affected the transaction cost at the point of purchase, while most young house buyers were still earning meagre salaries to be able to afford other housing costs.
“For an affordable house of RM300,000, (the exemption) saves about RM6,500 on the sale costs.
“Unfortunately, you also need to have enough for a downpayment and enough income for the loan repayments. This is a real problem for young people.
“The issue for young house buyers is simply that their income is too low. Often, they have other debts, and their jobs are not secure,” he said.
He noted that average wages in 2021 for the 25-34 age group was only RM2,664 per month, while more than half earned less than RM2,000 per month.
“At these income levels, it is difficult to get loans.
“For all households with one or more earners, the average income in 2020 was only around RM7,089, and half had income below RM5,209,” Williams said.
He said there were also other issues affecting not just the demand side of housing, but also the supply side.
“Overall, people must calculate whether owning a home is even sensible.
“While it has been the culture to promote home ownership in the past as a dream or indication of success, it makes less sense in the modern world and people should reconsider whether it is necessary at all,” Williams said.
Economics expert Prof Dr Chung Tin Fah of HELP University said anything that would lessen the burden of first-time house buyers was welcomed.
“As first-time house buyers may have a lower financial capability, a stamp duty exemption will help reduce their burden. But this is a one-off help,” he said.
He suggested that the government consider providing more affordable housing to appeal to young adults or first-time buyers.
“An interest rate reduction will also be more helpful,” he said.
Centre for Market Education chief executive Dr Carmelo Ferlito said home ownership in the country was a matter of individual preferences, adding that it was important not to force young individuals to be in favour of ownership as they might fall into debt.
“Given the fact that home ownership in Malaysia is close to 75% and household debt is close to 90% of the GDP (gross domestic product), the real emergency in Malaysia is not owning a house but making sure that people do not get too much in debt.
“Malaysia’s household debt over GDP is the highest in South-East Asia,” he said.
He said instead of promoting home ownership, the government should encourage social mobility so that young people had the freedom to grow their financial potential and buy a house when they were capable and only should they want to.
Ferlito said current alternatives – such as renting-to-own or any other long-term financial scheme – would subject individuals to renounce mobility and rewarding job opportunities that might arise throughout a long-term loan.
“You may also expose yourself (through the commitment) to the cyclical fluctuations of the economy.
“Another alternative is to keep on renting and to remain alert to different opportunities. It is a matter of stability versus possibilities.
“Technically, it is called time preference. None of the choices is right or wrong in itself. It depends on different individuals and their attitude toward time,” he said.
Economist Datuk Jalilah Baba said the stamp duty exemption for first time house buyers was a good incentive to encourage purchases of affordable houses not exceeding RM500,000.
“However, our local banks must also support this effort by encouraging sales of affordable housing to push our economy to be more vibrant,” she said.
Some banks could offer a special rate for an allocated period and for selected new housing estates, as allowed by Bank Negara rules, she added.
