Improvements to the Housing Credit Guarantee Scheme (HCGS) under the Budget 2023 through the increase of financing funds and expanding the qualification of applicants to fixed income groups can help reduce the number of unsold low- and medium-cost houses.

Economic expert Jain Yassin said the scheme, which offers financing up to RM400,000, will bring cheer to fixed and variable income groups who wish to own their first home before the age of 35.

“With the amount of financing, buyers can get a comfortable home even if it is further away from the city centre and it is something healthy for the industry as many homes within the range of financing can be sold,” he told Bernama as a comment on Prime Minister Datuk Seri Anwar Ibrahim’s announcement in Dewan Negara on Wednesday that the scheme would expand to include both income categories and benefit the B40 and M40 groups.

The government had announced during the Budget 2023 on February 24 that the scheme would be improved by raising financing funds from RM3 billion to RM5 billion to help first-time housebyers, especially those with variable income.

According to a report issued by the National Property Information centre, there are 10,901 properties under RM400,000 that have been built but are unsold at the fourth quarter of last year.

Jain also said that the government needs to have a risk assessment on the possible consequences of its implementation as the country should learn from the property overhang that occurred in the United States in 2008.

The Universiti Teknologi Mara (UiTM) Sabah Management and Business Faculty senior lecturer added that the US at the time loosened housing loan conditions but many foreclosures occurred as buyers were unable to fulfil their repayments, forcing the government to use additional funds to solve resulting problems.

“Even though generally the scheme is different as there is a company appointed to manage the financing process with tighter vetting, while in the US, the banks were giving out loans directly, the implications might be similar,” he said.

Meanwhile, private sector employee Zaharah Adnan, 35, who is on a fixed income, said the initiative was good for him as he had long dreamt of owning a home in the capital but did not have enough financially for a deposit.

“Not everyone has a high salary while starting off, and due to many commitments, I find it hard to save. With savings of only RM100 a month, it’s quite hard for me to realise my dreams of owning a home because I can’t save enough for the deposit,” he said.

Based on information on the HCGS website, those who qualify for financing need only pay a mandatory deposit equivalent to three monthly instalments, way lower than the 10 per cent of purchase price set previously.

For e-hailing driver Mohammed Khairul Ali, 33, the main obstacle for people like him from owning a home would be to obtain a bank loan as he would not qualify thanks to the lack of payslips and other documents.

“Don’t even talk about housing loans, even vehicle loans and personal loans are hard. So if the scheme will help solve this issue, then it will be a great help for people like me,” he added.

Source: Bernama