Nine reasons why affordable homes floundering here, according to developers

Rehda president Datuk Seri Fateh Iskandar (centre) and chairman Datuk Jeffrey Ng Tiong Lip (right) at a press conference in Petaling Jaya July 14, 2018. — Picture by Azinuddin Ghazali
Rehda president Datuk Seri Fateh Iskandar (centre) and chairman Datuk Jeffrey Ng Tiong Lip (right) at a press conference in Petaling Jaya July 14, 2018. — Picture by Azinuddin Ghazali

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PETALING JAYA, July 14 — The Real Estate and Housing Developers Association Malaysia (Rehda) Institute has identified today nine structural problems which it said are behind why the country is struggling to ensure a sustainable supply of public housing.

The report titled “Affordable Housing Report” released this morning cited 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 oversupplies, lower financial approval rate for the lower income groups, and absence of latest market data.

“At the moment, there is a lack of coordination between the public and private sectors in providing affordable homes,” Rehda Institute chairman Datuk Jeffrey Ng said at the media briefing session.

“There are various definition of what affordable means and the median household income differs from state to state,” he added.

Ng explained that there were many agencies within the government sector that were in charge of providing affordable housing projects and likewise in the private sector.

He pointed out that this led to a lack of coordination, which has resulted in the mismatch of supply and demand, thus, leading to the tens of thousands of unsold units.

As of the first quarter of this year, Malaysia recorded a total of 23,599 in residential overhang.

Most, however, are contributed from properties worth RM500,000 and above, and mostly came from Selangor, Johor and Penang.

“Every [housing project] approval is imposed with affordable housing quota which is scattered in various locations including where there may be no demand and lack of a suitable eco system,” the report said.

To address this problem, Ng said Putrajaya needs to set up a Special Purpose Central Agency (SPCA) under the housing ministry to redefine the roles of public and private sector in providing a holistic master planning for affordable homes.

“SPCA should streamline the functions and policy formulation based on household income and demographics in respective states and local areas,” he said.

For example, he said the Bumiputera quota policy needed to be re-examined as he explained that unsold units contributed from this category not only added to the unsold units in country, but also cost developers for holding such units.

“[The] release mechanism of unsold Bumiputera quota must be transparent and within reasonable time,” the report said.

The report also pointed that an unsustainable crossed subsidy model in private developments resulted in purchasers of non-quota houses to pay a higher price for subsidised affordable housing units.

“If the government can define the price range for affordable homes price range, public sectors can focus on that while the private sector can focus solely on properties based on market demand,” Ng explained.

Other initiatives to tackle this problem, the report cited, include converting subsidies to social housing stock such as rental programmes and sale of affordable homes to those who can afford, especially for the middle and bottom 40 groups.

The report also proposed for banks to offer 100 per cent housing loan to the lower income groups and first-time home buyer, as well as to reintroduce the Developer Interest Bearing Scheme (DIBS) with a proper mechanism.

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