Household debt mostly due to property buys, say Minister

Kuala Lumpur: Deputy Finance Minister Datuk Ahmad Maslan said Malaysian households' financial assets to household debt ratio of 214 per cent last year should be good news, as most of the debt was incurred for purchases of properties or assets.He said although the household debt to Gross Domestic Product (GDP) ratio of 87 per cent in 2014 can be seen as high in the Asian region, it is not worrying as Malaysian households have a high level of asset ownership relative to their debt level.

"The main reason for the growth in household debt is rising house prices, with purchases of residential properties accounting for nearly 50 per cent.

"If the property industry reduces house prices and offers more units of affordable homes, the household debt can definitely be lowered," he told reporters after his keynote speech at the Unesco Wen Hui Award commemoration luncheon here Thursday.

Ahmad was responding to concerns that Malaysians' high levels of household debt could put the country in a risky situation.

SPONSORED CONTENT

Sabah revenue hits RM6.97 billion: Hajiji says GRS State Government may see full term

Kota Kinabalu: The Sabah Government continued its momentum in managing the economy in line with the commitment and spirit of the Sabah Maju Jaya (SMJ) when it posted record high state revenue of RM6.973 billion last year.

He explained that with respect to the household debt to GDP ratio of 87.1 per cent, purchases of residential properties accounted for 45.7 per cent, followed by purchases of non-residential properties (7.7 per cent), vehicle purchases (16.6 per cent), credit card debt (3.9 per cent), personal loans (15.7 per cent), and purchases of securities and shares (6.5 per cent).

Ahmad said the household assets to debt ratio over the last few years has been consistently above 200 per cent, at 235 per cent, 225 per cent, 223 per cent and 220 per cent for the years 2010, 2011, 2012 and 2013 respectively.

Stay up-to-date by following Daily Express’s Telegram channel.

Daily Express Malaysia

He expressed hope the household debt could be lowered to less than 75 per cent of GDP as in 2010, through financial literacy programmes, the government and private sector offering more affordable houses, and raising household incomes through entrepreneurship activities.

Meanwhile, he said the government's decision to raise the real property gains tax (RPGT) from 15 per cent to 30 per cent this year for properties disposed of within four years of purchase could rein in house prices and limit purchases by foreigners to properties worth a minimum RM1 million. – Bernama

Try 1 month for RM 18.00

Try 1 month for RM 18.00

Try 1 month for RM 18.00