The government should adopt Singapore’s HDB model, said Chan.—File pic
Prime Minister Datuk Seri Najib Razak has proposed to raise the eligibility ceiling monthly income to RM10,000 per household, up from RM6,000 for those buying houses worth up to RM400,000.
“These measures may be good to help first-time buyers to purchase their first homes now but there is no mechanism in place to protect future buyers who will end up bearing the brunt of a situation that will only worsen in future,” Real Estate And Housing Developers’ Association Malaysia (REHDA) executive councillor Datuk Jerry Chan told The Malaysian Insider.
He said instead of introducing short-term measures, Putrajaya should look at Singapore’s Housing Development Board (HDB) flats model.
“In Singapore, once a HDB flat owner ‘outgrows’ his unit, he has to sell it back to the government where the unit will go back to those who qualify for a HDB flat,” he added.
In Malaysia’s case, current first home buyers may be able to purchase affordable housing built implemented by PR1MA under the RM1.9 billion allocation, but a few years down the line, these owners would reap high profits selling the homes according to market value.
“This means, future buyers will face the same problems we are facing today or worse; they will have to pay higher for the same property that was sold at below market value under the government’s affordable housing programme,” Chan said.
He also said PR1MA affordable housing of below RM400,000 should be built in places such as Klang, Kuala Lumpur and Penang where property prices are very high, instead of at Seremban or Kuantan.
“We do not need PR1MA to build RM400,000 homes in Seremban or Kuantan as developers are already building homes below this price there,” said Chan.
He proposed a three-step approach to fully address the whole affordable housing issue instead of scraping at the surface of it with PR1MA.
“For a start, the government could make it a ruling that loans taken under the My First Home Scheme have a lower interest rate so as to reduce the burden of buyers in servicing the loans,” he said.
Chan said the second step would be for the government to subsidise or to come out with a ruling for manufacturers to reduce the costs of cement, steel and building materials to reduce construction costs and, ultimately, reduce pricing of new built houses.
The final step is to ensure that all those who bought affordable housing are only allowed to sell it back to the government or a property management pool, where the property will only be sold back to first time buyers at an affordable rate instead of to anyone who can pay a price driven up by market demands.
Recently, the term “affordable housing” has been making headlines with many home buyers clamouring for a resolution to increasing property prices, especially in urban areas in the country.
This mostly affects those in the middle- to lower-income group who could only afford homes that are priced at RM350,000 and below. The high prices for properties within cities like Kuala Lumpur, Shah Alam and Penang have put homes there out of reach for most middle-income wage earners because of the disparity in income growth as compared to the costs of living.
“The costs of living, including the price of properties, have increased at a speedy rate over the years but income has not increased as much,” said Chan.
For example, 25 years ago, an entry-level engineer had earned about RM1,000, but now, a person in the same position earns only double that, about RM2,000, he said.
In comparison, land prices have increased 25 times in the past 25 years, bringing with it hikes in property prices and costs of living.
Chan said the increase in property prices, especially recently, could be attributed to a lot of factors, from increase in building materials, land prices and the additional requirements that developers has to adhere that increases costs.
According to FIABCI national committee member Michael Geh, the increase in income rate is about 10 per cent each year while property prices increase by 20 per cent each year.
“When property price increases are double that of income, it makes home ownership unattainable for a lot of people,” he said.
He said one of the factors that had caused soaring property prices could be due to a speculator or investor driven market.
“Some developers sell property units en bloc to investors or they give investors insiders’ tips to property launches with discounts thrown in,” he said.
He said this practice will indirectly drive up property prices because there will not be any units left for genuine house buyers, forcing this group to buy units at inflated prices from the investors.
Geh said the ways to overcome this is to involve all parties such as the government, to give discounts in development charges, premium charges and allow for fast-track approvals for projects within the affordable housing range.
“The developers could also implement a fair sales and marketing system so that units are not sold en bloc to only investors but first time buyers will also have a chance to purchase the units at the launch of the project,” he said.
On PR1MA, Geh also said this affordable housing programme is only applicable at urban places such as Penang, Petaling Jaya, Kuala Lumpur and Johor Baru where houses are out of affordable range.
Under the recently announced Budget 2013, government will allocate RM1.9bil to build 123,000 affordable housing units. This programme will be implemented by PR1MA, Syarikat Perumahan Nasional Berhad (SPNB) and Jabatan Perumahan Negara.
PR1MA will spend another RM500 million to build 80,000 units of houses with prices ranging from RM100,000 to RM400,000 and the locations identified include Kuala Lumpur, Shah Alam, Seremban, Kuantan and Johor Baru.
The houses built under this programme will be sold at 20 per cent below market value through an open balloting system.
The government also announced changes to the My First Home Scheme launched under the previous Budget, increasing the income limit for individuals from RM3,000 to RM5,000 each month and from RM6,000 to RM10,000 for families.
The 50 per cent stamp duty exemption for first-time house buyers has also been extended to December 31, 2014.
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