Is buying a house an asset or a liability?

Why?

It is because it is the space where we can be ourselves freely without having to worry about what the world think of us.

But in the modern day context, are a house or property considered an asset or liability in the long term?

Can we, especially the bottom 40 (B40) and middle 40 (M40) per cent of the household income groups build our finances strong enough to withstand rising inflation and finally own our own home?

Property is Still Tops in Investment Form

Faizal Bhana, director for Middle East, Africa and India at Jersey Finance, said real estate or property investment is still tops in investment form and remains a highly attractive asset class and, in addition is Shariah-compliant from Islamic investment perspective not only in Malaysia but around the globe.

He said Jersey Finance's Global Attitudes to Islamic Wealth Management reports rated real estate and infrastructure as the most important portfolios both today and in 18 months' time.

"These asset classes are synonymous with stability and, emerging from the pandemic, such a stable return profile and asset backed nature provides some much-needed security to investors who are taking a long-term view and dealing in long-term investment horizons.

"This is the case of investment strategies and plans for locally, regionally and internationally focused investors," the international wealth manager said.

On whether an interest rate increase post COVID-19 would cause more tension towards household debt, he said a rise is expected to have minimal impact.

"Real estate is seen very much as a long-term solution to managing volatility and uncertainty as part of investment portfolios," he said.

On the subject of affordability of affordable housing, Housing and Local Government Minister Datuk Seri Reezal Merican Naina Merican has often expounded in his speeches that housing purchase at a young age would significantly increase one's net worth.

Hence, it has become the government's aspirations under the ambit of the ministry, as well as the newly established National Affordable Housing Council (MPMMN), to enhance the quality of affordable housing for the youth.

While it has been the dream of many to own a place of their own, especially young people, the question is whether we have built enough affordable houses for them, and most importantly, whether it meets the specified criteria of quality benchmark?

How Successful is Our Affordable Housing Programme?

Taking Perbadanan PR1MA Malaysia as an example, when it was first established with the aspiration of building 500,000 houses, many were elated that such initiative was taken.

A decade has passed and PR1MA is currently building 21,580 units and has completed building 27,821 units, bringing the total to 49,401 nationwide.

The completed number of units however only accounts for 5.0 per cent of the total target while the overall completion is only at about 10 per cent.

What is more shocking was, out of the total 61 projects announced, 21 are now considered as problematic or "projek sakit".

Not to mention the prolonged delay buyers had to endure to wait for the completion of projects such as in Rantau, Port Dickson, Negeri Sembilan; Melaka Tengah 2; and Brickfields, even after completion, housing defects (for example in Tebrau) were at an unaccepted level.

Delays not only occured in PR1MA projects, but also that of Syarikat Perumahan Nasional Bhd (SPNB), including Pangsapuri Aspire Residence Fasa 1, Cyberjaya A.

For house buyers, builders delay will cost them more money. Buying a house does not only involve paying a loan but also insurance such as Mortgage Reduction Term Takaful (MRTT) and Mortgage Level Term Assurance (MLTA).

Despite being paid Liquidated Ascertained Damages (LAD) for the delay, it would barely cover their financial commitment as most of those who purchased these houses are in the M40 group who were already on tight budget.

The delays will cause the quality of the houses to deteriorate after the defect liability period ends, more so if the developers were to deliver poor workmanship on the completed houses.

A Home is a Need, But Quality and Timeline Need is Essential

While government has taken steps to ramp up home ownership initiatives through various avenuessuch as the Home Ownership Programme, MPMMN and 12th Malaysia Plan (12MP) to build 500,000 affordable houses, the properties must be sufficient in quality and delivered on time.

While Malaysia heads towards "Livable Malaysia" or "Malaysia Yang Berdaya Huni", we need houses that are tailored based on the affordability benchmark and reached the quality of a home.

For strata units, owning a residential unit is more than just paying for it. The ownership also entails maintenance fee and sinking fee, among others, and failure to pay them would cause another problem not only for them but also other house owners in terms of services rendered by the management committee.

While a house is a long-term asset to ensure a roof over one's head, quality plays a huge role in determining if the property is a liability or an asset in the long run.