By Khairie Hisyam
The mismatch between affordable housing supply and demand in the country stands at 40% difference, says Housing Minister Abdul Rahman Dahlan.
Quoting data from the Department of Statistics Household Income Survey 2012, Abdul Rahman said that approximately 80% of Malaysians earn below RM6,954 per month, and that this group can only afford houses priced at RM300,000 and below based on the credit line of 30% of net income at the current base lending rate (BLR) of 6.6%.
In comparison, National Property Information Centre (Napic)’s 2012 report stated that only 31.7% of all new housing units launched were priced below RM250,000, said Abdul Rahman. “This shows that there is imbalance between the demand and supply of houses towards the right target group in Malaysia.”
“There still exists a serious gap of about 40% between the provision of affordable housing below RM300,000 compared with the demand,” said Abdul Rahman. “Of concern is the fact that income growth has not been keeping in tandem with (rising house prices).”
Abdul Rahman Dahlan
Abdul Rahman added that affordable housing accessibility has become a more critical problem among the middle income group, which is why the government has introduced the 1Malaysia People’s Housing Program (PR1MA).
According to Napic data since 2011, house prices has risen between 9.96% and 12.3% annually on average.
Kuala Lumpur has the most expensive houses with house prices averaging at RM534,216 per unit in 2012. Sabah and Selangor follow with average per unit prices of RM382,160 and RM374,815 respectively.
‘Loose purse strings contributed to house price surge’
The minister also touched on the current regime of low interest rates which has made housing loans particularly attractive, in turn leading to growing numbers of property investors.
“The introduction of easy home financing has brought home ownership entry costs to an all-time low,” said Abdul Rahman. “Some developers have introduced schemes such as developers interest-bearing scheme (DIBS).”
Abdul Rahman noted that through the DIBS scheme, buyers do not need to fork out significant capital to purchase property, and instead only need to pay their deposits before waiting for their house to be completed before selling them for a hefty profit.
“Besides, financial institutions also have been willing to finance residential mortgages because such loans are typically viewed as low-risk, but this loosening of the purse strings has undoubtedly contributed to the rapid increase in house prices,” said the housing minister.
More curbs to come?
In addition to previous fiscal policy tightening by the government by way of stricter lending guidelines and 70% financing margin cap on third house purchases onwards, the housing minister hinted that more measures may be needed.
“To overcome this problem and ensure the sustainability of the housing sector, there is a strong need for better government intervention and policies,” said Abdul Rahman.
“Moving forward, the government would not hesitate to further tighten the fiscal policies in order to curb property speculation and ensure reasonable and affordable property prices in the country,” said Abdul Rahman, adding that state governments and developers should also play their part.
“There is a need for both the government and developers to collaborate in creating a healthy and sustainable housing and property sector,” he said, adding that “the winners should include property owners, property developers and the local economy.”
“Currently, most state governments only impose a certain quota for low-cost housing, and even this in many instances is not strictly enforced,” commented Abdul Rahman, adding that more can be done.
The housing ministers also suggested that state governments impose affordable housing quotas according to their needs while reducing the low-cost quota.
“For example, there can be a 20% quota for low-cost housing and a 20% quota for affordable housing,” he said. “These quotas should be imposed based on the current demand in specific areas.”
Abdul Rahman was speaking at the 16th National Housing and Property Summit 2013.
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