Scepticism over housing policy

  • Business
  • Tuesday, 29 Jan 2019

Housing and Local Government Minister Zuraida Kamaruddin with [from left] Housing and Local Government Ministry secretary-general Datuk Seri Mohammad Mentek,Housing and Local Government Deputy Minister Datuk Raja Kamarul Bahrin Shah and National Housing Department director-general N.Jayaselan at the launching of National Housing Policy [2018 -2025] at the Sime Darby Convention Centre yesterday. - AZMAN GHANI / The Star

KUALA LUMPUR: After months of repeated delays, the National Housing Policy 2.0 was finally launched, but fell short of expectations and was met with scepticism.

The view by industry experts is that there is a scarcity of policies to achieve the many targets of the housing policy.

Housing and Local Government Minister Zuraida Kamaruddin launched the National Housing Policy 2.0 yesterday in the presence of developers, the National House Buyers Association, local councillors from other states and Bank Negara personnel.

Industry observers acknowledged that the effort was good but needed more direction.

Real Estate and Housing Developers’ Association (Rehda) president Datuk Soam Heng Choon said: “It (the National Housing Policy 2.0) is a policy of the government. There are so many initiatives they need to do.

“Some of them will involve housing developers and we will see how we can support this programme of providing a roof over every head.” Soam is also IJM Corp Bhd chief executive officer and managing director.

Rehda past president Datuk Seri Fateh Iskandar Mansor said it was good that the government engaged with players from the private sector and the National House Buyers Association, and hopefully, something would result from its data collection initiative.

“As developers, we need to know the demand, what type of units are in demand, the locality and pricing,” said Fateh Iskandar.

Khazanah Research Institute director Dr Suraya Ismail maintained her long-held stand that a quick and steady supply of quality and affordable units with proper infrastructure is the antidote to the current broken state of the housing sector.

“We cannot supplant a weak supply sector or a strong demand sector with financing,” she said. Instead, what is needed is “decent house prices”.

Suraya said the saviour of the current broken housing sector is supply, not financing.

At the launch of the National Housing Policy 2018-2025 yesterday, Zuraida said it is targeting to build 100,000 affordable homes by the end of this year, in line with the Pakatan Harapan government’s manifesto to provide budget housing totalling one million over a decade.

Zuraida said the homes, which would be made available all over Malaysia, would be capped at RM300,000, and this would be detailed later on in the March housing expo.

A sub-policy of the National Housing Policy is the National Affordable Housing Policy, which has the aim of providing quality affordable houses for the bottom-40 group with a median monthly household income of RM3,000.

The National Housing Policy outlined five focuses, 16 strategies and 57 action plans, 15 of which would be carried out in the first two years.

The five focuses include improving accessibility and affordability; quality housing for all; cohesive neighbourhoods; improving coordination between housing development and transportation; and strengthening institutional capability for the National Housing Policy.

PPC International managing director Datuk Siders Sittampalam said the new housing policy was ambitious but short on details on how the government planned to achieve its target of building one million affordable homes in 10 years.

“The question is how or where will it be? Will it be developed on federal or state government land? Is the government going to assist in purchasing the land? Or, will the government impose that responsibility on developers?”

If it is imposed on developers, Siders said there would need to be some form of cross-subsidy provided to them.

“It would not be viable if the responsibility to build affordable houses is imposed on developers, given the current market situation.”

He said if developers are obligated to allocate a portion of their developments for affordable housing, they may then have to hike up the prices of their other products to accommodate the squeeze in margins.

“Given the current market condition, the market is not ready to accommodate higher property prices,” he said.

Bloomberg reported that the government is planning a sale of US$5.5bil of real estate to bridge the gap between property oversupply and the lack of affordable homes, with developers being asked to offer at least a 10% discount.

The numbers are staggering: about 180 developers will offer 22,000 units worth a total of RM22.5bil (US$5.5bil) at the March 1-3 expo. About a quarter of the property on offer would be priced at RM300,000 or less, said Zuraida, adding that the transactions would be exempt from stamp duty fee.

“We hope that better discounts would be given to the people, as high as possible,” Zuraida said. “We are trying to reduce the gap starting from the expo. From then on, we will try to clean up.”

The average cost of a Malaysian home was five times the annual median household income in 2016, above the global standard of three times, Bank Negara said in a quarterly bulletin posted in August.

Meanwhile, the number of residential units which remain unsold nine months after completion rose 18% from a year ago to 29,227 units in the first half of 2018, according to the National Property Information Centre. That’s before accounting for almost 100,000 uncompleted units that were coming to the market.

The problem may lie in a mismatch between the type of homes Malaysians are looking to buy, and the luxury units that developers keep building. The central bank has estimated that RM282,000 is the maximum price achievable for the median Malaysian household, while actual median house prices are 11% higher, it said in the report.

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