Home ownership becomes elusive dream
Published on: Friday, January 03, 2020
By: David Thien
KOTA KINABALU: In the run up to 2020 when Malaysia was targeted to be a high-income and developed nation, many parents and children realised that the younger generation may not be as fortunate as the older ones.
Many younger Malaysians cannot afford to buy a home with their level of income as property prices, even according to Bank Negara and economic think tanks, are severely unaffordable.
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A lawyer told Daily Express he bought two condominium units in 1Sulaman for his children studying overseas in case they wanted to return and work in Kota Kinabalu.
One Sabahan we spoke to, Paul, recently sold his single storey semi-detached home at Austral Park for RM1.15 million and bought a condominium in Inanam which was constantly advertised in Daily Express for few years.
“My wife was extremely unhappy but I had no choice,” he told Daily Express, on the downgrade in lifestyle, leveraging on investment in property as a storehouse of monetary value to cash out.
With that sale, he cut his business losses from operating a backpacker hostel in Bandaran Berjaya which he had invested some RM500,000 but sold off to a homestay operator in Ranau for RM130,000.
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Now he has some RM500,000 in cash from the house sale which he still needed to support a child in Form 4 and to retire, possibly using his EPF savings to finance tertiary education later. Two other sons are employed – one in Taiwan and the other locally, staying with his father. The locally employed son cannot earn a high enough salary to justify what his father spent for his further education earning around RM2,500 as a graduate.
There were grandparents who sold off lands or home property to finance education of their grandchildren or place the deposit for their apartments to see them off on a better footing in life with their spouses, but the younger generations cannot hope to be able to buy back such sold real estate in the future for their heirs.
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What we can learn from this account is that there are many people like Paul who cashed out on their more valuable landed property to move on to retire in a cheaper property to avail themselves of some cash flow to live on. Hence, there is some demand for condominiums or apartments. This is a trend.
We can also learn that some home stay operators outside the state capital are doing well to be able to buy property or business complementing their home stay in urban areas.
Paul complained that his business really dived after the imposition of RM10 tourist tax on locals and foreigners, then changed to foreigners only, before being exempted, but it came too late for his business in a very competitive environment considering Airbnb listings on the Internet crowded out his listing and website. Home stay operators are not required to collect any tourist tax on guests.
Hotel now are assertive against unfair competition by Airbnb type business without paying tax or subject to safety regulations including fire and other perils, but home stay is also posing competition when Caucasian foreigners moved straight from the airport into the rural areas for a more relaxing rustic environment, if the purpose is eco-tourism travel later to Sepilok or Kinabatangan etc.
The Ranau home stay operator who bought over Paul’s business name goodwill, computer system with the beds, air-conditioners etc. just planned to house late night traveller arrival from KKIA for a night or to let them enjoy the state capital prior to their flight home via KKIA as an added value to their holiday experience. Most chartered flights arrive in the wee hours of the morning and those from East Asia, the bulk of the tourists thronging Sabah.
Sabah MICCCI head Datuk Seri Panglima Wong Khen Thau told Daily Express that hoteliers admitted that most airlines flying into KKIA are low-cost airlines and if this trend continues with the exception of MAS and RBA as Singapore Airlines then Silk Air is replaced by low-cost Scoot Airlines, the hotel business may suffer in future as high net worth travellers would not keen to come on budget planes to stay in 5-star hotels or higher resorts.
But there is potential for private jets, and superyachts in TAED, but these are very limited to want to reach Borneo with lack of all weather radar advisory. Not to mention piracy threat warnings in the east coast.
So, we can see another trend here that Bumiputras in home stay enterprises are benefiting from the tourism boom as well as children may not like to take over their parents’ business like which Paul wanted his son to inherit a good income earner in the long term to tide out the downturn, but the sons declined wanting to pursue their own ambitions.
This has an effect on property as many heirs just rent out their family shop when the time comes for the business founder to retire or pass on. Paul rented part of the hostel premises from a Sarawakian landlord – a trend in Sabah that many non-Sabahans have invested in property, and that not all Sabah Natives own lands of their own as the population grows.
The brain drain from Sabah has contributed to the property market outside of Sabah like in Puchong in West Malaysia where many Sabahan youths work in the Klang Valley to seek to advance their career with higher income prospects unavailable in Sabah. Same in Singapore and Iskandar Malaysia not to mention those who are now citizens of another country.
Few would buy a retirement property or investment property in Sabah considering the poor rate of returns on investment as many have no intention of returning in face of political extremists depreciating ringgit with lower purchasing power.
There are thousands of unemployed or underemployed graduates and more are entering the employment market.
Wong said soup kitchen charities in Kuala Lumpur told him that there are a few hundred Sabahans surviving on their handouts, whether homeless or not. Anyway, Daily Express did a report years ago on this fact, but the politicians were nonchalant about it, considering Sabah Foundation has a Rumah Sabah there and could have done something positive.
Conversely, the design by politicians to resettle foreigners in Sabah as future vote banks has led to the mushrooming of squatter settlements with power and water theft woes, some of which are now being slowly recognised as gazetted villages. Only few employers provide quarters to house their unskilled workers.
The rural to urban migration for work will only aggravate the situation if the housing need of the lower income groups are not addressed in a proper long-term workable public housing policy. Not many are willing to pay rent from financial constraints due to limited disposable income.
Wong did not even inform some of his neighbours that he had to sell off his house and will shift soon. People in his housing still approached him recently to sign a petition to the new Sabah government against LPPB building 500 apartments on supposedly zoned recreational open space next to their housing which will aggravate the rush hour traffic jam and parking woes, besides social problems. There were 20,000 forms given out for applicants for the 500 units, according to some insiders.
He obliged them and signed. He told Daily Express that even the higher hill slopes nearby his housing then was earmarked for condominium development, now waiting for the market demand to pick up without much foreigner interests.
He regretted what was stated in development blueprint in the absence of a masterplan for the city, showing the supposed playground was given over to car dealer and now a surau with a mosque completed on the hilltop.
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