Putrajaya to work with banks, lenders to address affordable home shortage

Datuk Johari Abdul Ghani said only 21 per cent of new housing launches in Malaysia were priced below RM250,000 in 2014 amid an oversupply of higher-end properties priced above RM500,000. — Picture by Choo Choy May
Datuk Johari Abdul Ghani said only 21 per cent of new housing launches in Malaysia were priced below RM250,000 in 2014 amid an oversupply of higher-end properties priced above RM500,000. — Picture by Choo Choy May

PETALING JAYA, Aug 18 ― Second Finance Minister Datuk Johari Abdul Ghani today said the government will engage the housing and banking industries on issues preventing new buyers from acquiring affordable homes.

Availability in the housing market was imbalanced, he said when noting that attention continued to be in higher-priced segments when the majority of demand was for affordable homes that sell for under RM250,000.

“For example, only 21 per cent of new housing launches in Malaysia were priced below RM250,000 in 2014 amid an oversupply of higher-end properties priced above RM500,000,” he said.

Aside from lack of attention to the affordable home sector, Johari also said fewer units were being built overall, with an average of 80,089 homes completed annually between 2011 and 2015 when the number of households was increasing by 166,000 each year.

This meant that there was fewer than one new home for every two new households, he noted.

“This development has increasingly priced out more urban Malaysian households from the housing market,” he said.

Johari said he will meet with banks and other stakeholders, including construction companies, to see how best to mitigate the situation.

He also suggested that lending rules be relaxed for first-time buyers and leeway given to the maximum monthly instalments approved, in order to address the high rejection rates currently reported for mortgage applications.

Bank Negara Malaysia enforced a strict debt-to-income ratio for loan qualifications to address the country's growing household debt, but the move has been criticised for causing applicants to be disqualified from mortgages due to their combined repayments.

“This shouldn't be the case we must be flexible with them and the government will discuss with all parties to address this,” he told reporters later.

Johari added that there will also be efforts to curb speculation of house prices by developers as part of the measures to tackle housing affordability.

He was speaking at the Forward Economic Outlook and Global Winning Real Estate Strategies in an Uncertain market seminar at Wisma Rehda.

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