DIBS? Yes, it’s a comeback potential

Remember the days when everyone, even those without sufficient downpayment could afford to buy a new condo? Okay, I am exaggerating, maybe not everyone but the majority of fresh graduates with a stable job. The happy days for these buyers were over when Developer Interest Bearing Scheme (DIBS) was cancelled. I remain a firm believer that we must be disciplined, save enough for downpayment and buy within affordability. Otherwise, we may be slowly providing air for a property bubble to burst. There’s little need to look too far, just look at the largest economy in the world. The 2008 mortgage crisis was simply a crisis of greed. From the bankers to the buyers and speculators. Let’s keep away from this.
The government is now considering housing developers’ request to reintroduce DIBS (Developers Interest-Bearing Scheme) for first-time house buyers. According to Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar, the government is still discussing whether to relax current buying and lending guidelines for first-time house buyers. He said, that even if the government wants to help these first-time buyers, it has to ensure that home ownership comes with the ability to service the loans as well. The same view was shared by many. Read here: Stay safe, buy within affordability and stop bubble building 
In terms of complaints about loan rejections, Wahid said that from their own survey of the banks, the banks have informed that the current rejection ratio is less than 20 percent. The cooling measures implemented a few years ago has also helped to curb excessive speculation and moderating rapid growth in household debt. (Note: Nothing about pushing prices lower because that’s not what cooling measures are for)  He pointed out that the construction industry has to also address the productivity-related issues. These include low skilled work force, inadequate or a mismatch in training and development, over-reliance on low-skilled foreign labour, limited adoption of modern practices, mechanisation and industrialised building systems (IBS), the lack of data and information-driven decision-making, and a limited adoption of information technology such as building information modelling.
I do not like DIBS. However, if this can truly be efficiently carried out for only first-time home buyers, perhaps it’s worth a consideration. I would not want these people to rent their whole lives. Think very seriously though, more often than not, the only reason why we could not afford that first home is due to us. Over-spending on wants, “gambling” on investment because we did not know much or even kept doing the same job and hope for higher pay every year. Let’s wait and see how DIBS can make a comeback if indeed it is on its way back. Perhaps this time, it will be controlled better and not help speculators push up house prices while those in need of one, suffers.
written on 12 Nov 2015
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