It is not a crime to dream of a place to call one’s own. It is hard to beat having a roof none can take away in the worst of times. If anything happens, at least there is a home to run to. It is a comforting feeling to have a haven. That is the sort of sentiment fuelling the dream of homeownership. So pervasive is the thought that the inability to own one is seen as a problem by many.

Across the Pacific Ocean, the American Dream is invariably linked to having a good home. With a government subscribed to the Dream, measures were taken to encourage homeownership. As the housing market crashed partly due to the pro-homeownership policy, the Dream grew distant to create a pessimistic American worldview.

Across the straits, the Singapore government built high-rise flats all over the island, partly to encourage homeownership. The product of that encouragement is a contemporary culture. These flats are ubiquitous enough to form part of the Singaporean consciousness. The Complaints Choir of Singapore sings: ”I’m stuck with my parents till I’m 35, ”˜cause I can’t apply for HDB.” Failure to own a home is a source of shame.

It is no different in Malaysia. Homeownership occupies the collective mind. The high prices of ordinary homes stand as a barrier. That barrier is stirring up discontent among the middle class and down.

The Malaysian government knows this and it has introduced various incentives to make homeownership a cheaper endeavor for Malaysians.

For the longest time, the government has relied on low-cost housing projects to encourage homeownership. Despite the name, the term low-cost can be a misnomer. What is cheap for the financially well-off Malaysians may not be cheap for the impoverished. The whole enterprise can add too much financial burden to would-be owners, pulling them down into a deep unsustainable debt hole.

That concern does not stop the Najib administration from expanding its pro-homeownership policy by introducing the 1 Malaysia Housing Program. Proponents of the program tout the initiative as an affordable home program. Just as the term low-cost can be misleading, so too can the term affordable.

In the eagerness to translate private dream into reality through very public means, not many have asked, is there a better option to homeownership?

Popular opinion immediately accepts homeownership as the only respectable option.

The debates on homeownership ignore other housing options altogether.

For one, renting can be a superior option to ownership. That can be so when rental cost can be much cheaper than mortgage payment, when mortgage payment eats too much of current income and when the financial market is sophisticated enough to handle the substantial saving arising from the difference between the mortgage and the rental rate. The saving can present a whole lot of possibilities that homeownership cannot. There is virtue in flexibility and whatever virtue homeownership has, flexibility is not one of them.

Perhaps more substantially, one has to realize the importance of having decent home. If a decent home means homeownership, so be it. The relationship can be true but it is not necessarily true. Neither does homeownership absolutely mean decent home.

Pro-homeownership sentiment ignores this complexity and instead falsely assumes homeownership stands above having a decent home or that homeownership is about having a decent home.

Despite an alternative that focuses on having a decent home instead of homeownership, many individuals and the government continue to believe in the virtue of homeownership without question. The former complains about the affordability of homeownership and the latter, indulging the former, refuses to believe and to adapt to a new reality.

Ownership must have made sense in the past but just as time changes, so too can the justification for homeownership. It could very well be that individual and societal preferences, formed after years when the financial logic actually made sense, lag behind the market. When expectation lags behind market and with the government supporting the indulgence, something bad is bound to happen.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Malaysian Insider on October 24 2011.

One Response to “[2446] Homeownership isn’t the only way”

  1. on 27 Oct 2011 at 15:52 Bobby

    I almost cannot fathom how I did it, or why I did it, but I did it.
    The house was nice, big enough to accomodate 2 families as my wife expected us to take care of her elder sister’s family as well.
    Then the bank called.
    “I’m sorry, the loan amount will have to be reduced based on ……..”.
    I was ready to call the whole thing off, and forsake the 10k spent on legal fees alone.
    Somehow, the money came in to reduce the loan amount.
    When I think back, it was crazy to have bought a house when I could barely afford it.
    The value has now doubled, and that alone soothes my worries about going through the purchase in the first place.
    The main point is that most houses in the Klang Valley are “unaffordable”.
    To me, that spells wastage.
    When people are being forced to buy affordable homes further away from where they prefer to be (from family, work etc), they will incur transportation costs that weren’t necessary in the first place.
    Add in the factor of our “superb” public transportation and you have 75% of Malaysians wasting their money on their vehicles and petrol.

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