Prioritise home ownership before starting a family

ONE day at a coffeeshop near Penang Road, I was sipping iced coffee when I overheard a young couple with a toddler at the next table talking about buying a house.

The woman told her husband that she was eyeing a single-storey house in Seberang Prai.

The husband noted that it was priced at RM400,000 and that was the end of their conversation.

This, I am sure, is a predicament of many young families in Penang. Buying a house almost anywhere in Penang is like buying a house in Kuala Lumpur.

A fresh graduate might earn an average salary of around RM3,000 but with commitments like a car, lifestyle needs, insurance, utilities and rent, it can be difficult for those who have just started working.

The notion that the price of homes in Penang is too high is not far-fetched.

Desirable attributes such as a strategic location, peaceful neighbourhood, space and amenities drive property prices even higher.

In the 1980s, my late father, with his basic salary of RM700 to RM800, bought a house in Tanjung Bungah for almost RM100,000 with a 30-year loan.

The price of homes in Penang is still too high, even for the middle class.

The monthly instalment was RM550 and he earned extra money by giving tuition to the children of wealthy families in our neighbourhood.

He raised four kids and my mother was a homemaker. It was so difficult on the salary of a primary schoolteacher, but he did it.

In 2014, the Tanjung Bungah house where I was raised, was sold for almost RM1mil and we bought a double-storey terrace house in Bertam, Kepala Batas on the mainland a year later.

It was where my father lived until his death in 2021 at age 83.

I miss that house in Tanjung Bungah. It was only 1,200sq ft, but it was in the beautiful part of Tanjung Bungah that locals call Hillside. The neighbourhood was so peaceful and friendly.

But we had no regrets selling since the return on investment was marvellous.

I bought my first home in my early 30s in 2013, an auctioned apartment at Bandar Perda, for RM55,000 and sold it in 2015 for about RM100,000.

After our marriage, my wife and I stayed with my parents in their newly bought house in Bertam that cost RM420,000.

As a struggling journalist at that time, I could not afford to buy my own house.

Three years into our marriage, we bought a house in Kulim, Kedah, for RM200,000 – that was all we could afford with our combined salaries.

We scraped through and gradually cancelled our credit cards and settled our personal and car loans.

But as the years went by and the traffic jams got worse, it became too difficult to commute to Penang from Kulim.

People wanted to rent our Kulim home but my wife feared tenants would ruin the house.

Our Kulim house is now vacant and we plan on selling it.

We have been married eight years and continue to manage our financial affairs prudently.

We don’t relish tightening our belts to take on another housing loan so we have put off buying a house in Penang.

Affordable houses in Penang are priced between RM250,000 and RM400,000. The cheaper it is, the further away it will be from town and one can expect it to be smaller with fewer amenities.

According to a loan calculator on a property website, a home buyer would have to fork out RM1,092 a month in instalments for a RM250,000 house.

For a RM400,000 house, the monthly instalment would be RM1,747. Both calculations were based on a 3.9% interest rate for 35 years.

The average housing loan interest rates that local banks offer is from 2.8% to as high as 4.8%.

Recently, the government announced a 100% stamp duty exemption on instruments of transfer and loan agreements for properties priced RM500,000 and below, and a 75% exemption for properties priced between RM500,000 and RM1mil from June 1 last year until Dec 31 this year.

In addition, all property transfers between spouses, parents and children, and grandparents and grandchildren, will receive full stamp duty exemptions for the first RM1mil of its value.

Despite this, I still feel that the price of homes in Penang is too high, even for people in the middle class.

In all likelihood, affordable housing is going to be less affordable in five or 10 years, given the rate of inflation. Salaries for middle-class workers will go up but it will never be enough.

While the state government is doing all it can to make sure Penang citizens of all segments can own their own homes, the state government won’t be able to do this without help from the Federal Government, and this is part of why the unity government plays such a crucial role.

I wish I could tell young couples in Penang that buying a house should be a priority when they decide to start a family.

The car is your mode of transport, so hold off on your dream car until your late 40s or even early 50s and get an economical car with cost-effective maintenance.

Learn from my late father: buy a house to raise your family and sell it just before you retire for nearly 10 times its purchase price.