By Kamil Ridzuan
A hot button issue especially in urban areas such as Klang Valley and Penang is the rising cost of housing. With the cost of housing – landed property and apartment units – climbing to giddying heights, a majority in the low and middle income group are finding it difficult, if impossible to own homes.
New housing projects in Klang Valley, for instance, have homes priced at over RM400,000 and above even in locations that are hardly ideal, while landed property launches routinely start in the million ringgit category.
Taking heed of this, the government via the 1Malaysia Housing Programme (PR1MA) has pledged to build 500,000 affordable homes over the next five years.
Since its establishment in 2011, PR1MA has launched a slew of affordable homes nationwide which should be able to satisfy demand for affordable homes which is defined as property priced at between RM150,000 and RM400,000.
Time to deliver
The Real Estate Housing Developers’ Association of Malaysia (REHDA) president Datuk Seri Michael Yam tells Business Circle that the government’s intention is noble and earnest and is a step in the right direction.
“The policy is a good one and has been set in place. Now is the time for implementation, execution and delivery. Affordable homes is much in demand especially in urban areas such as Kuala Lumpur, Penang and Johor Baru.
“However building 100,000 units is already a stretch let alone 500,000 units. So PR1MA should engage with the private sector and talks are already on-going between the government and the private sector to share the pie,” Yam says.
He says Malaysia has done well over the past several decades building a total of one million low cost units but as Malaysians get more and more affluent, there is a need for better and higher quality affordable homes.
“The government and the private sector should have no problems to cooperate as 50% of the property firms listed on Bursa Malaysia such as Sime Darby, SP Setia and non-listed firms such as Island & Peninsular are government-controlled,” says Yam.
As for the private sector, companies such as the Emkay Group controlled by Tan Sri Mustapha Kamal Abu Bakar are already stepping up efforts to build affordable homes.
In an interview with Bernama last July, Emkay, which is one of the proponents of affordable housing said that it will launch the first phase of 960 units of affordable homes by end of 2013, of the 3,682 units that will be built in Cyberjaya.
Emkay Group chief executive officer Ahmad Khalif Mustapha Kamal reportedly said the affordable housing project, to be developed at a cost of RM500 million, will help boost Cyberjaya and in return encourage more local and foreign companies to set up their offices.
However, the construction of affordable homes cannot be carried out by the private sector without the cooperation of state governments.
In an interview with the New Straits Times last October, Glomac Berhad chief executive officer Datuk Fateh Iskandar Mohamed Mansor said states play a crucial role in the affordable homes programme because land matters fall under state jurisdiction.
“Various additional costs had been imposed which burdens developers. Consequently, buyers suffer as properties had to be sold at a higher price,” said Fateh Iskandar.
The Government on its part has played its role in trying to cool the property market by implementing several measures under Budget 2014 such as increasing Real Property Gains Tax (RPGT) to 30% for properties disposed of within three years.
The government also raised the minimum price of property that can be purchased by foreigners from RM500,000 to RM1 million to prevent them from competing with domestic buyers.
On February 13, Prime Minister Datuk Seri Najib Razak launched the MyHome (Private Affordable Ownership Housing Scheme) programme where qualified applicants who are first time home buyers will get a subsidy of up to a maximum of RM30,000 to buy selected low-cost housing units.
Applications for the scheme, which is via the National Housing Council, start in April. Najib said RM300 million will be allocated to the scheme this year.
Under the scheme, if the price of a low-cost house is set at RM40,000 a unit by a state government while the developers sell them at RM70,000 each, qualified buyers need only pay RM40,000. The balance of RM30,000 will be paid by the Government.
Other than these measures, a New Straits Times report in February stated that the government also plans to enforce a new ruling on bulk sales in order to curb property speculation.
Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said the move was partly in response to the rising popularity of property investors clubs. The club are basically a group of individuals who pool their money to buy houses in bulk (thus receiving discounts from developers) before selling them at a profit in a practice known as property flipping.
It is the latest trend among local and foreign investors and though not illegal, this activity has a direct impact on the local property market.
Developers who intend to make bulk sales of more than four units must obtain prior approval from the Controller of Housing.
Challenging year ahead
Affordable homes aside, Yam says Malaysia’s property market the year ahead will be tough and challenging partly due to the cooling measures introduced. He points out that there is already a decline in home transactions.
According to Business Today, Rahim and Co Chartered Surveyors also expects the property market this year to slow down, especially in areas such as Iskandar’s Nusajaya and Kuala Lumpur city centre.
The group’s findings show that the decline in particular areas began in the first half of the previous year, wherein there was an overall 12.6% drop in Malaysia’s residential transactions.
Siva Shanker, president of the Malaysian Institute of Estate Agents, foresees that while 2014 will be a difficult year for the Malaysian property market, he predicts this is temporary, attributing it to a knee jerk reaction to the Budget 2014.
CIMB Research believes that in the first half of this year, there will be a return in interest when it comes to purchasing properties. It will be a gradual increase, but the group believes that once potential buyers come to realise that the new budget plan does indeed make way for more affordable properties, this will turn into an escalating trend.
Yam meanwhile says that while the authorities have shown that they are taking heed of the rakyat’s concerns as regards to affordable homes, they should also continue spurring the property market. A healthy property sector is a key indicator of a growing economy.