Concern over parents going into debt to buy their children homes

Concern has been raised about what appears to be a rising trend of parents doing whatever it takes to secure a house for their children, even before they are grown, including taking out a mortgage and being tied to multiple loans.

On social media, couples are openly discussing their financial plans to purchase assets and establish nest eggs for their children well before they hit adulthood. 

This in turn has caused concern among financial experts, real estate agents and members of the general public, sparking an exchange of opinions and debate. 

Family financial expert Fazli Sabri said it was unfair to expect parents to scrimp and save in the current economic climate just to ensure that each of their children has a house for the future. 

"They must ask themselves, is the ultimate goal of parents to secure houses for all of their children?" he said. 

Speaking to MalaysiaNow, Fazli said there were three financial bases that should be fulfilled before parents move on to other considerations such as the purchase of homes. 

Number one on the list is to have enough savings for emergency situations. 

"We don't know what will happen in the future," he added. 

"The second is to make sure that their children have social protection, whether in the form of insurance or takaful. 

"And third most important is having enough funds for their children's education." 

If all of these fundamentals are met, Fazli said, it would not be a problem for parents to begin looking at other matters such as real estate and property. 

Rising house prices

A couple in Setapak, Kuala Lumpur, who spoke to MalaysiaNow said they had decided to buy gold bars from the bank to be used as house deposits for their four children who are still in university and secondary school. 

The couple who asked to be known as Zakiyah and Ismail said they were worried that their oldest child would not be able to afford a home even though he will be able to enter the workforce in a few years' time. 

"I can't afford to buy four houses," Ismail said. "But house prices are going up. My children will have the same problem, only worse.

"Houses in the affordable range are all far away from Kuala Lumpur, and we don't want our children to live that far." 

Zakiyah and Ismail both work as pharmacists at a private hospital. 

So far, they have managed to secure two houses for their children in Bangi, Selangor. For these, they pay RM4,230 in monthly loan instalments – RM2,115 per house. 

"To get the other two houses, I will try to obtain a loan through our second EPF account," Ismail said. 

"It's okay if we don't have any money to retire on. As long as the children have a house." 

In the UK, a report by Halifax said one bank had found that a third of parents help their children secure their first home, leading to concern among experts that this will damage their own finances. 

Fazli said strong financial support for children would not be a big issue if parents could afford to buy them houses or real estate assets. 

But he cautioned that the youth should learn to be disciplined and manage their finances correctly. 

"They need to know how to spend wisely," he said. "How to pay house instalments and bills, and so on. 

"Parents can help, but at the same time they should teach them sound financial lessons. For example, they pay the deposit and their children pay the monthly loan repayments." 

This way, Fazli said, children could develop a sense of financial responsibility and manage their own money without depending on their parents' support.