Bank Negara says 'broader alternatives to home ownership' key to protect buyers

KUALA LUMPUR (Oct 11): Bank Negara Malaysia said developing broader home ownership alternatives, including a well-functioning rental market, was deemed a policy priority to protect homebuyers from financial hardship.

In a statement today, Bank Negara said the suggested need for alternatives showed the adverse consequences poorly designed incentives to increase home ownership could have on housing affordability in the longer term.

"It also provides a viable route to help low income and early career individuals onto a path towards eventual home ownership. Better enforcement is also critical to prevent the abuse of schemes intended to assist specific household segments to own or rent homes.

"Factors that influenced the efficiency with which house prices were adjusted were also examined," Bank Negara said.

Bank Negara issued the statement in conjunction with the central bank's fourth economics research workshop yesterday. The workshop's theme was "The Housing Market: Issues and Policy Options".

Today, Bank Negara said there was a broad consensus that policy considerations for housing the nation would need to balance the objectives of providing a minimum quality housing standard while preventing the build-up of imbalances in the housing market.

"While households require access to credit to own a home, it is not in their own interest to incur an unsustainable level of debt to do so.

"Policy measures to ensure access to credit must therefore be pursued with concern for the protection of homebuyers from financial hardship leading to foreclosure and poorer welfare," Bank Negara said.

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