More bank loans alone won’t make housing affordable, say experts

 They say structural reforms and supply-side incentives are needed to increase housing affordability.

A property expert wants state governments to manage land supply, zoning, and density to align with developers in delivering affordable housing at suitable locations. (Bernama pic)

PETALING JAYA:

 The allocation of more bank loans will not solve the housing affordability issue unless structural reforms and supply-side incentives are also addressed, say property experts.

Consilz Tan, a fellow with think tank Center for Market Education, said the government should instead speed up development approvals and adopt more flexible safety and quality standards to reduce risks for developers and ease supply constraints.

“This is because, from the supply side, a higher risk is a pressure factor on prices.

“Overly strict requirements surrounding the building of affordable homes, such as minimum size, fixed pricing, or mandatory furnishing, impede proper coordination between supply and demand,” Tan told FMT.

She urged the government to shift away from ownership-focused KPIs and instead adopt housing access indicators, by integrating housing, transport and labour policies into a coordinated framework for solutions.

Tan said state governments should manage land supply, zoning and density to align with developers in delivering affordable housing at suitable locations.

NK Tong, immediate past president of the Real Estate and Housing Developers’ Association suggested banks allocate about 30% of their mortgage portfolios to affordable housing loans.

He said such a move could help narrow the gap between housing supply and homeownership for lower- and middle-income Malaysians.

‘Real issue’ 

National House Buyers Association (HBA) secretary-general Chang Kim Loong called for banks to serve lower-value borrowers, and suggested that they offer a preferential rate for first-time buyers.

He said the real issue was the lack of affordable housing in high-demand areas, pointing out that the scarcity of land has pushed developers towards prioritising higher-value projects.

Chang proposed that the government provide more incentives for developers to build affordable properties.

“HBA has talked extensively about such incentives such as lower corporate income tax rate for affordable properties, lower land and conversion premiums and faster approval process for affordable properties,” he said.

Chang also highlighted several key challenges for first-time buyers, including limited affordable homes in prime areas, the burden of a 10% down payment, and ancillary costs like legal fees and stamp duty.

He said that while incentives such as 100% financing, stamp duty waivers, and legal fee exemptions exist, they typically apply only to new properties purchased directly from developers, not homes found on the secondary market.

Chang called for the government to remove the requirement for private developers to undertake social housing projects and allow them to focus on building affordable properties.

Social housing refers to low and medium-cost housing designed for low income groups, with a price range between RM35,000 to RM150,000 per unit.

Affordable housing, on the other hand, refer to units priced above RM150,000 to RM300,000, aimed at middle-income groups and lower-middle-income earners who cannot afford market-rate housing and are not eligible for social housing. - FMT