Making homes affordable should be an objective of housing sector, says KRI

• “We should not ‘brand’ affordable housing as an effort that only the government can provide,” said Suraya Ismail, Director of Research in Khazanah Research Institute.

KUALA LUMPUR (June 2): Making homes generally affordable to local citizens should be an objective of the Malaysian housing sector.

Suraya Ismail, Director of Research in Khazanah Research Institute (KRI) said this in reaction to Real Estate and Housing Developers’ Association (Rehda) Malaysia’s statement that the government should “be fully responsible for the delivery of affordable housing, as it was over 50 years ago, and as it is in many countries worldwide”.

And Rehda’s statement came about as a reaction to Prime Minister Datuk Seri Anwar Ibrahim’s call yesterday for the Local Government Development Ministry to review conditions set for housing developers to ensure that they provide affordable housing for all mega projects developed.

Anwar said this was necessary as the requirement for these projects to include at least 30% of affordable housing was not followed according to the schedule and scale set.

“We should not ‘brand’ affordable housing as an effort that only the government can provide. Consider the counter-factual: Who would the private sector cater for -- the unaffordable housing market?” said Suraya.

“I think Rehda is conflating affordable housing, social housing and low cost housing.

Social housing should be under the government provision, but private market affordability is under the private sector,” she explained.

Meanwhile, Carmelo Ferlito, CEO of the Center for Market Education said that “most calculations about affordability are made only with reference to the primary market.”

“Obviously, there is no place in the world where every citizen buys a brand new house. In fact, in Malaysia 80% of transactions happen on the secondary market. Therefore, the judgement on affordability is given only on 20% of the market,” said Ferlito.

“Therefore, we judge affordability in the primary market but people buy in the secondary market. There is a mismatch here that usually tends to impact policy decisions.

“Unfortunately, data on the secondary market are not so systematic to make a serious evaluation,” he added.