There is a 7% to 13% salary increase to 1.4 million civil servants. There will be extra RM6billion in the economy. It's reported that 60% to 80% of this money will be spent. Will it help in the sales of houses? Will this group of people spend on houses - like buying their first house if they have not already owned one?
The salary increase in the public sector may help sustaining the buying momentum in the housing industry. There is a caveat here - the increase in salary will only have real value if there is no corresponding increase in other costs of living or price of houses. If price of houses is increased by 10%, then the salary increase of 13% will not help one in buying a better house or to qualify for the loan previously rejected. ( borderline rejection )
The salary increase in the public sector may help sustaining the buying momentum in the housing industry. There is a caveat here - the increase in salary will only have real value if there is no corresponding increase in other costs of living or price of houses. If price of houses is increased by 10%, then the salary increase of 13% will not help one in buying a better house or to qualify for the loan previously rejected. ( borderline rejection )
Many developers of new housing projects around Klang, Shah Alam and Kuala Langat are adopting the strategy of giving priority to government servants to buy the houses. I believe they will focus more on this group of customers now. But how many houses in a housing project can one sell to government servants? Those in the private sector don't get the same salary increment. Government servants alone cannot help in buying all the houses in all the housing projects. The housing industry need far more number of buyers than this. And this has to come from the private sector. Hence, the take-up rate of new houses for the middle to low income category will still be affected by the tightened guidelines on house loan approval despite the salary increment to the government servants.
