Property – A limelight on affordable housing

THE issue of affordable housing has generally been discussed and debated for the last couple of years.

The widening discrepancy between housing property prices and the people’s average income continues to become an on-going problem for the government and developers who are also trying to keep prices down amidst the current economic condition.

In 2015, a report by Khazanah Research Insitute revealed that residential properties prices in vastly populated areas or urban areas such as Kuala Lumpur and Penang were both ‘severely unaffordable’, with a median multiple of 5.4-folds, further shedding light on the need to boost the supply of affordable housing.

According to a report by RHB Research Sdn Bhd (RHB Research), while property transactions have dried up significantly, prices have not corrected enough – this is even after three consecutive years of slowdowns in the property market.

“In 2016, the residential and nonresidential property transaction volumes year-on-year (y-o-y) fell 14 and 25 per cent respectively. At the same time, transaction values still climbed four per cent (residential) and 82 per cent (nonresidential), potentially due to some en bloc transactions.

“The growth in Malaysia’s House Price Index has moderated to 5.3 per cent in the first quarter of 2017 (1Q17) compared with 13 to 14 per cent during the peak in 2012 and 2013 respectively,” it said.

Under 11MP (2016 to 2020), the government set the target of building 653,000 homes for the poor, low-income and middleincome households under various programmes, compared with 111,000 and 102,200 units that were built under 9MP (2006 to 2010) and 10MP (2011 to 2015), respectively.

This year is expected to be no different than before as Budget 2018 could also focus on affordable housing, with initiatives that are expected to benefit both the consumers as well as developers.

Analysts generally believe that Budget 2018 could see announcements further initiatives for the government’s on-going affordable housing programme; 1Malaysia People Housing (PR1MA) and PPA1M.

Nevertheless, expanding the affordable housing programme is not a clear cut solution as the research arm of Maybank Investment Bank Bhd (Maybank IB Research) opined, in the case of PR1MA, of the original 500,000 affordable homes targeted to be constructed over a five year period of 2013 to 2018, to date, only 267,902 units have been approved nationwide and of these, 139,393 units are currently under construction, and 8,475 units has been completed as at August 16, 2017.

As such, the research team believed that for 2018, the government could announce a single or central authority to oversee the affordable housing market and to ensure that the projects run on time.

“This entity – likely modelled after similar bodies oversease like Singapore’s Housing Development Board – should consists of relevant federal government ministries and agencies, state governments as well as the property and financial industry players.

“The objectives, among others, are to better coordinate public and private sector affordable housing programmes and projects to avoid over-building, and to better match supply and demand via improved information and database on eligibility, products, pricings, locations, and financing,” it added.

Aside from the disparity between supply and demand, Maybank IB Research also pointed out that location remains an issue for affordable housing.

“The new authority could play a role in addressing this particular issue such as coordinate the process of identifying and designating federal and state government lands – especially in urban and startegic areas, and including undeveloped/unutilised Malay reserve lands and wakaf lands – for the purpose of land banking for affordable housing; incentivising government-linked property companies and private developers to carve out some of their land banks for affordable urban housing within a certain price range such as not more than RM400,000,” the research team suggested.

It noted that there are already ‘one off’ deals for PR1MA to build affordable housing on lands belonging to government-linked agencies and companies such as Royal Malaysian Customs Department (in Penang), and TNB (in Selangor).