Measures to bridge home ownership gap

KUALA LUMPUR (Oct 12): The supply and demand gap of affordable housing has yet to narrow to a desirable level.

However, to the government’s credit, many schemes have been set up to ensure the availability of affordable homes, for example 1Malaysia People’s Housing and its Skim Pembiayaan Fleksibel, Rumah Mampu Milik Wilayah Persekutuan, Rumah Selangorku and Rumah Idaman Rakyat, among others.

That said, the home ownership numbers are not convincing, especially among the young. A study by HSBC Holdings plc in February this year showed that only 35% of 1,000 Malaysian millennials (those born between 1981 and 1998) polled already owned their own homes. This was below the global average of 40%.

Eupe Corp Bhd managing director Datuk Beh Huck Lee said the government should prioritise more on ensuring the existing affordable home schemes provide the intended support to prospective homebuyers.

“[The] schemes must have good mechanisms and processes to make sure they are striking the right balance between affordable prices and quality homes, and are as targeted as efficiently as possible to achieve their objectives,” he said.

Meanwhile, Hua Yang Bhd chief executive officer Ho Wen Yan said the government should provide more incentives in the upcoming budget to encourage developer to use Industrialised Building System (IBS) — which could speed up the building process and lower construction costs.

“What we can propose is for the government to look into moving the whole industry towards IBS as it improves quality, reduces cost through industrialisation and will be beneficial for potential new homebuyers. It should give out incentives to developers and contractors who are moving towards IBS,” Ho said.

While Ho noted the affordable housing schemes introduced by the government are “never enough”, the government cannot afford to keep losing money and there has to be “a balance” in terms of its spending, he said.

“It is never enough but the government has started [rolling out affordable home schemes] and it’s a good step. I think we need to have a balance — the government cannot keep giving so many free lands and subsidised housing otherwise a lot of money will be lost,” he said.

Some quarters point out that the locations of the affordable home projects are not strategic, thus making them an unattractive option for Malaysians who prefer to live closer to their workplace.

CBRE|WTW managing director Foo Gee Jen opines that location is the key factor for affordable housing projects.

“This is not a new issue ... 10 to 15 years ago there was an oversupply of low cost housing in Malaysia, and people were shocked by this, but actually it was due to these houses being at the wrong location.

“Today a lot of affordable housing is still planned very far from what the rakyat want, so we think these houses need to be at reasonable locations; it does not need to be on prime land but it has to be accessible by public transport, and there should be infrastructure such as schools and community centres in the locality,” he said.

Meanwhile, Bloomberg reported that Bank Negara Malaysia told the country that houses simply aren’t affordable.

According to Bloomberg, the central bank has created a website with data aimed at debunking the “myth” that access to financing was deterring home ownership, revealing that loan approvals for key cities are near 70% or higher.

Bank Negara has resisted calls to loosen lending, saying that developers should boost efforts to cut costs and pump up supply.

Earlier this week, The Association of Banks in Malaysia refuted allegations that homebuyers are finding it tougher to obtain housing loans and that loan approval times are increasing.

“Banks have always been supportive in providing home loans to all eligible borrowers. The overall housing loan approval rate remains high at 73% of the applications in 2Q17. Furthermore, 72% of the housing loan borrowers are first-time house owners under the affordable home category.

“For the first eight months of 2017, commercial banks approved over RM42.2 billion and disbursed approximately RM39.5 billion in loans for the purchase of residential properties. Financing therefore remains available for eligible borrowers,” said ABM in a statement.