Your Kids Can Never Own A Home. Do You Even Know Why?

There are 3 things youths generally complain about these days.

 
Their salary, the price of petrol and the price of property.
 
 Let’s first take a look at the average
property price in Malaysia.
 
 The average price per square meter is RM 8,367 for a house in the city.
 
 The average price of a house in Kuala Lumpur is RM 772,126.
 
 If your child earns RM5,000 per month, he would only be able to take a loan for RM 287, 551 in order to afford to dedicate only 30% of their income to the monthly payment for a term of 30 years.
 
Your child would need to earn a salary of RM 8,000 monthly in order to take a loan for RM 460, 081 so they can afford a RM 500, 000 home.
 
 This is assuming 2 things:
 
1. Your child can afford to pay a downpayment.
 
2. Your child doesn’t have other obligations, such student loans, car loans and personal loans.
 
So you see, the situation looks bleak for the modern day youth.
 
 
broke-monopoly-july-27

 

Why Can’t Your Kids Own A Home?

1. Investors
 
The price of property, like everything else, fluctuates because of the demand and supply.
 
Prices go up when people are buying.
 
Who is buying these properties?
 
Investors.
 
We all should know by now that property falls under appreciating assets.
 
This means the price of property goes up in time in most cases.
 
The purchase of a property also allows an investor to supplement their monthly payments by renting it out (or AirBnB).
 
Screen-Shot-2015-01-27-at-1.41.05-PM
 

2. Inflation

This is a term a lot of people hear but not enough people understand.
 
What is inflation? Prices go up while the value of money goes down.
 
How does this affect property prices? Interest rates.
 
The rate of inflation affects how banks lend money.
 
When inflation is high, the banks charge more interest to keep their investments financially viable.
 
When interest rates go up, it becomes more expensive to purchase a home.
inflation_jerryholbert
 
 

3. Salary

It’s their income.
 
They can’t afford to own a home at the rate they’re going.
 
As a country develops, more business opportunities are created that are taken by the big businesses.
 
This creates income inequality.
 
The rich people are earning more. The poor people are earning less.
What-Right-Does-a-Mother-Have-over-Her-Sons-Salary
 
 

Is There A Solution?

We wouldn’t be writing this article if there wasn’t.
 
Most of the solutions available can only be implemented by the government, but there are steps your child can take to beat the system that is designed to keep them down.
 
There are several options available to your child.
 
First of all, there really is nothing wrong with
RENTING.
 
 

Why You Should Rent Instead

First of all, you should know that you get what you pay for with rent. It’s not a waste of money. There’s no debt.

The commitment is fairly secure. You can leave after 1 year if you don’t like it.

There’s no interest on rent.

You pay your rent. You stay in your home.

Your owner pays for most of the things in ‘his’ home.

There’s a myth that owning your home is better. That’s no longer true.

If you end up paying double the market price because of the interest and it’s a leasehold anyway, what exactly is the point?

You’re living way beyond your means and you lose access to liquid assets that can be better used to finance your future.

With Speedrent, you can save even more and cut out the middle man too.

What used to be a complicated and troublesome process is made infinitely easier with the all new renting app.

Having said that, here are some of the solutions you can look at if you want to save up to buy a home in the future:

 

1. Be An Entrepreneur

If income is an issue and opportunities are abundant, your child should venture into the startup and entrepreneurship arena.
 
Pending a solid business plan and an eye for business, this method is a good way to offset the trickle down effect in the economy.
 
Startups and SMEs now have a better competitiveness in the market due to social media and the internet.
 

2. Be An Investor

If you can’t beat them, join them.
 
Just because your child can’t afford to buy a home doesn’t mean they can’t start small.
 
Start investing and scale up that investment.
 
Low-cost property. Mutual funds. Individual stocks. Peer-to-peer lending.
 
These are all viable options.
 
 

Conclusion

Every obstacle can be overcome.
 
It’s important to identify the problem before we can try to solve it.
 
We need to understand why youths cannot afford to own property in the current day and age.
 
Now that we know, all parties need to take active steps to solve this problem.
 
With the introduction of government programs like
My First Home SchemePR1MA homes, the government is doing their part to assist youths in owning a home.
 
Youths also need to improve their skillset, income and plans in order to be able to afford a home.
 
It is when the clouds are darkest that the people have to shine the brightest. Lucky for you,
Speedrent is here to help. Make sure you check us out!

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