Budget 2019 Wishlist 007: Delivering affordable housing to the public

An affordable housing project by the Housing & Development Board (HDB) located in Toa Payoh. Photo: Khalil Adis Consultancy

By Khalil Adis
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During the previous few budgets by the Barisan Nasional administration, there were a lot of motherhood statements on providing affordable homes under the PR1MA scheme.

However, if you were to ask any young Malaysians, many will tell you that the access to affordable housing remains a faraway dream. Back in 2016 when I was briefly staying in Kuala Lumpur, I would often have a small talk with the Uber and Grab drivers on my journey, asking them whether they had already bought a home.

Most often than not, all of them would reveal the same tragic tale. Yes, they applied for their PRIMA homes a few years ago, but the approval has yet to be announced. This sad reality remains until today.

Some of the major stumbling blocks that contribute to the lack of home ownership among Malaysians are the inability to get loans. This is possible due to bad credit, non-payment of PTPTN or having insufficient cash for the down payment.

Perhaps, more alarmingly, is the shortage of affordable homes in the market combined with the people having insufficient knowledge on how to go doing so.

While I noted that the Ministry of Urban Wellness and Housing under the newly minted Pakatan Harapan government has recently conducted an official visit to Singapore to study our public housing model under the Housing & Development Board (HDB), more needs to be done.

Here are my budget wishlists to solve the current housing crisis.
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Education programme to help first-time homebuyers

The recently concluded Jom Cari Rumah event is an example of an education programme for those wanting to buy a property. Photo: Khalil Adis Consultancy

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There is currently a lack of awareness and financial literacy on the steps toward housing ownership.
As a result, many young Malaysians are ill-equipped on the know-how on buying their first home. The school will be a great place to start educating them on the importance of financial literacy as this will improve their chances of buying their first home while empowering them on the basics of home ownership.

One housing body to gauge demand from the public

The Singapore government's housing agency's The HDB Hub is located at Toa Payoh. Photo: Khalil Adis Consultancy

There is currently a demand-supply mismatch in the country as there is no central governing body to estimate demand for homes.
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This leads to issues whereby states like Johor and Kuala Lumpur are facing a massive glut in the medium to luxury end of the market. On the other hand, the strong pent-up demand for affordable housing is still unresolved.

Besides, the various affordable housing programmes rolled out by the state and federal governments confuse the public. As a suggestion, the Malaysian government can emulate the Singapore model whereby affordable homes are being implemented under one single government agency – the HDB.
This will allow the government to gauge demand accurately and to build housing accordingly based on the HDB’s Built-to-Order (BTO) scheme.

Different levels of housing affordability threshold for the various states

Homes located in Iskandar Puteri in Johor. What is defined as affordable in Johor varies greatly from what is affordable in Kuala Lumpur. Photo: Khalil Adis Consultancy

Last but not least, there needs to be a different level of affordability in the different states in Malaysia rather than a one blanket definition of say, less than RM500,000, for affordable housing.

This is because the cost of living and the median income differs significantly from state to state. According to the Department of Statistics Malaysia, the median income in 2016 for fairly urbanised states like Kuala Lumpur, Putrajaya and Selangor are RM9,073, RM8,275 and RM7,225 respectively.

On the other end of the spectrum, the median income in less urbanised states like Kelantan, Kedah and Pahang are RM3,079, RM3,811 and RM3,979 respectively.

From here, the state government should work backwards to determine the price of affordable housing based on the gross income not exceeding 30% of one’s mortgage.
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This will better address and target the needs of Malaysians in each state.

​This article was first published by StarProperty.my

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