Car or a house first?

Alan Tong justifies putting a house before a car but admits this is only possible when a comprehensive public transportation system is in place.

AFTER you have graduated and secured your first job, what would be the first big ticket item that would appear in your purchase list? Many would think of a car before any other item.

Owning a car has become the first priority for many young people in Malaysia.

However, in China, their youths have a different thought. They would prefer to own a house instead of a car as their first asset.

This is an interesting difference in mindset between the youths in Malaysia and China.

What makes our young people decide to purchase a vehicle which will depreciate in value over the years instead of a house which has the possibility of gaining capital appreciation over time?

There are many reasons influencing this mindset. Chief amongst them is the macro development of the country and in particular of our public transportation.

Regrettably, although our current public transportation system has improved, it has not reached the level of that of a developed country.

Waiting in a queue to board a bus or train which may not arrive on time has become a hassle to many who have to depend on them for their daily transportation.

Therefore, in order to move around in the most convenient and comfortable manner, Malaysians in general have little choice but to acquire their own vehicle as their first asset.

The situation is different when compared to that in cities with a comprehensive public transportation system. Let's look at China for example. As one of the fastest growing nations in the world, China is an inspiring example for us to study.

For the past 15 years, I have been travelling frequently to China and have witnessed the vast changes in its transportation system. Its government had envisaged the need to have an efficient transportation system to support its fast paced economy and was bold enough to implement and develop a transportation network ahead of demand.

Fifteen years ago, I hardly saw vehicles throughout a 100 km journey on well constructed highways in China (and even at that time some highways came with 14 lanes). Those highways are now supporting high traffic flow with millions travelling from one province to another every day.

In addition, many cities in China are now well connected with an efficient network of public transportation.

This comprehensive public transportation service has allowed its people to travel around easily. Owning a private vehicle is therefore not a necessity but a prestige. With its people moving to the big cities for jobs or business opportunities, the priority is to own a property for accommodation or business if possible.

If not, renting a property would be the next best option.

This explains the divergence in mindset between the youths in Malaysian and those in China when it comes to the question of wheather to own a car or a house first.

To address this situation, the government should take initiatives in developing an extensive public transportation system and subsidising the relevant projects, such as the latest Mass Rapid Transit plan.

Public transportation is an avenue where the government could channel resources to good use and benefit the lower income groups as a whole. Comprehensive public transportation at affordable fares would reduce the burden of travelling, and people could consider more capital investment tools, such as properties.

Although buying a house is also a major financial decision and there are a lot of factors to be considered, proper financial planning would help our young people to start saving towards their goal of owning a property at an early age.

We look forward to the day when our local public transportation system is well established. That day will also be the day where our Malaysian youths have the foresight and drive to own a house first before anything else.

Datuk Alan Tong is the group chairman of Bukit Kiara Properties. He was the FIABCI world president from 2005 to 2006 and was recently named Property Man of The Year 2010 by FIABCI Malaysia.

Datuk Alan Tong is the group chairman of Bukit Kiara Properties. He was the FIABCI world president from 2005 to 2006 and was recently named Property Man of The Year 2010 by FIABCI Malaysia.

source: THE STAR