KUALA LUMPUR: Property associations and players are hopeful that the government will announce key measures under Budget 2022 that can address and resolve perennial issues that have been a strain on the market.
Issues such as affordable housing and the overhang situation, despite being regularly addressed, continue to have an adverse impact on the market.
According to the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS), the affordable housing market is beset with plenty of problems and issues.
There are 8,439 unsold units of affordable housing, despite being priced below RM300,000. This showed a mismatch in supply and demand and it is partly due to affordable housing being built in wrong locations within poor catchment areas and the lack of public transport.
“Based on current household income, most Malaysians will not be able to afford a house. The current median house price is far beyond the affordability level of most Malaysian households,” PEPS said in a note on its Budget 2022 wish list.
There is still a lack of communication among the various agencies and state governments involved in affordable housing, according to the association.
“There is also no integrated data available on the supply and demand for affordable housing, income levels, affordability and pricing in order to build the right product in the right location.”
To resolve the conundrum, PEPS is proposing that the Housing Ministry make it mandatory for agencies and state governments involved in affordable housing projects to report their plans to avoid any duplication.
The association also proposed that research grants be given to the Housing Ministry to carry out in-depth research on supply and demand, product types and pricing levels to match the household incomes in each locality.
It recommended that the state economic development corporations, state agencies and government-linked companies play a more active role in developing affordable housing.
“This is because of their available land bank, either of their own or set up via joint ventures with developers to build affordable housing.
“The government should also set up a fund to finance the purchase of affordable housing, youth housing and the purchase of unsold units from other agencies for a rent-to-own programme.”
A mandatory market and financial feasibility study should be undertaken prior to the commencement of an affordable housing project.
At the Malaysian Property Summit 2021 earlier this month, Khong & Jaafar managing director Elvin Fernandez said conducting a market and financial feasibility study would also help to resolve the overhang situation in the country.
“The local authorities should demand an independent market study from the developer, prior to providing a development order.
“Similarly, banks should also demand the same from developers before approving a loan. Therefore, both the local authorities and banks need to play a role in determining the supply,” he was quoted as saying.
According to the National Property Information Centre (Napic), a total of 31,112 overhang units worth RM20.09bil was recorded in the first half of 2021.
This was an increase of 5.2% and 6.2% in volume and value respectively, against the preceding half.
PEPS urged the government to extend the Home Ownership Campaign (HOC) until June next year to assist potential buyers and help reduce the overhang level in the country.
“Currently, the HOC is only applicable to the primary market. To assist owners in the secondary market, PEPS is hopeful that the HOC be extended to properties in the secondary market as well,” it said.
According to PEPS, the secondary market had accounted for 60% to 65% of total residential transactions.
“But in the past few years, this has grown to more than 80%. Spurring growth within the secondary market would mean more transactions, which would influence general market sentiment and boost consumer confidence in the sector.
“Furthermore, the secondary market is also a source of houses for potential property owners, including first time homebuyers. By extending the benefits of the HOC to the secondary market, there would be more choices for buyers.”
The government kicked off the HOC in January 2019 to address the overhang situation in the country. The campaign, which was intended for six months, was extended for a year. It generated sales totalling RM23.2bil in 2019, surpassing the government’s initial target of RM17bil.
The government reintroduced the HOC in June last year under the Penjana initiative to boost the property market after it was adversely affected by the Covid-19 pandemic. The campaign ends at the end of this year.
According to Real Estate and Housing Developers’ Association (Rehda) deputy president Datuk N. K. Tong, as of Sept 30, a total of 73,503 residential units valued at RM47.38bil (after discounts) had been sold since the HOC was reintroduced last year. Discounts worth more than RM9bil were given to buyers during the period.
At a briefing last week, Rehda president Datuk Soam Heng Choon also urged the government to consider extending the HOC into 2022 as the campaign had been disrupted for over four months this year as a result of the prolonged nationwide lockdown.
Meanwhile, TA Securities, in a recent report, anticipated Budget 2022 to be primarily helpful to low-to-middle-income earners, as well as to first-time home owners.
“We are also hoping for more measures to ease the burden on property owners by extending the real property gains tax exemptions, along with lower rates. We anticipate friendlier measures for property developers and foreign buyers to spur market activities. We do not anticipate any new dramatic tightening policies, as this would derail the recovery of the property sector,” it said.
On what to expect in the upcoming budget, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz revealed that the budget would focus on speeding up recovery, strengthening economic resilience and catalysing reform.
“Like Budget 2021, we have mapped our budget initiatives towards sustainable development goals and we will continue to do so in Budget 2022,” he said.
Tengku Zafrul also said support for businesses would remain steadfast, be it via affordable financing schemes, better access to credit or grants so as to support operations while pivoting them towards increased automation and digitalisation..