WHAT’S HURTING AFFORDABLE HOUSING?
Govt should work with developers to resolve issues, says Rehda Institute
THE research arm of the nation's housing developers association says rigid policies, cross-subsidies and unproductive use of public funds are among the nine structural factors causing headwinds in the affordable housing sector. It proposes that the government set up an agency to redefine the roles of private and public developers in meeting the needs of homebuyers.
REHDA WANTS CAP ON AFFORDABLE HOME PRICES TO BE SET ACCORDING TO LOCATION
THE Real Estate and Housing Developers’ Association Malaysia (Rehda) Institute has identified nine structural problems in providing affordable housing.
Rehda Institute chairman Datuk Jeffrey Ng said the government should work with developers to resolve the issues.
Noting that Rehda had come up with a plan to address the issue, he said the structural problems identified included fragmented playing field between public and private sectors, rigid housing policies, unsuitable location, land scarcity, cross-subsidies that purportedly made houses more expensive, rising material costs, unproductive use of public funds that led to oversupply, lower financial approval rate for the lowincome groups and lack of latest market data.
Ng said the lack of coordination between the public and private sectors in providing affordable homes was compounded by the different definition of what affordable meant.
He said the median household income differed from state to state and there were many agencies, in the government and private sectors, providing affordable housing projects.
He said this had led to a lack of coordination, resulting in the mismatch of supply and demand, which led to tens of thousands of unsold units.
“Every project approval is conditioned on an affordable housing quota, which is scattered in various locations, including where there may be no demand and a suitable ecosystem.”
Ng said Putrajaya could set up a special purpose central agency (SPCA) under the Housing and Local Government Ministry to redefine the roles of public and private property developers in providing a master plan for affordable homes.
“The SPCA should streamline the policy formulation based on household income and demographics in states and local areas.”
For example, he said, the unsold Bumiputera quota not released into the open market was adding up to holding cost and overall cost of property development.
Up to March, Malaysia had 23,599 units in residential overhang. Part of these unsold units were under the Bumiputera quota.
Ng said this at a media briefing here following the release of a report titled “Affordable Housing Report”.
Present were Rehda Institute trustee Datuk Ng Seing Liong, Rehda president Datuk Seri FD Iskandar and Rehda deputy president Datuk Soam Heng Choon.
Iskandar said Malaysia was the only country with a high crosssubsidy and this had been going on for the past 40 years.
“This can happen if the market is okay, but the last four years was challenging for the property market.”
Iskandar was referring to the report that the cross-subsidy model in private developments resulted in purchasers of nonquota houses paying higher prices for subsidised affordable housing units.
“We suggest that it should be the government’s responsibility to build affordable housing and the private sector’s to deliver market-driven properties, without price control and quota,” he said.
Iskandar highlighted the suggestions of converting subsidies to social housing stocks, such as rental programmes and sale of affordable homes to those who could afford, especially the middleand low-income groups.
The report proposed that banks offer 100 per cent housing loans to low-income groups and first-time homebuyers.
It recommended the reintroduction of the Developer Interest Bearing Scheme, with a mechanism to tackle previous shortcomings.