By Khairul Khalid
Despite several efforts to tackle affordable housing, government initiatives are still flawed, especially in the resale of units. What should we do to improve the system?
The affordable housing dilemma is one that won’t go away anytime soon, despite it being drowned by other national issues in the last few months. Are we doing enough to solve the problem and what needs to be done?
Ever since the property market began soaring to record highs in the last five years, first-time home buyers have been increasingly priced out. Prevailing negative sentiments about the economy right now could make things worse.
What are the solutions? There are no easy fixes. It is a complex problem and there are things being done to address it. The cooling measures implemented by the government in recent years have succeeded (so far) in preventing crazy prices from becoming crazier, although that hasn’t stopped the craziness entirely.
Infrastructure is being beefed up (such as the construction of MRT and LRT) to make living outside central city centres a more viable proposition. There are also agencies such as Syarikat Perumahan Negara Bhd (SPNB) and PR1MA to build houses for low- and middle-income groups by the hundreds of thousands.
Will the problem be solved just by multiplying supply into the market?
Take for example PR1MA, the agency that was established in 2012 to produce more affordable homes for the middle-income group in urban areas. PR1MA houses range from RM150,000 to RM400,000 and are for individuals or a combined household income of between RM2,500 and RM10,000.
PR1MA is mandated to build 500,000 homes by 2018 – overly ambitious to say the least. But even if it meets those lofty targets, will the affordable housing issue finally be over? Is churning out thousands of homes within a subsidised and lower price bracket the magic pill to cure the homeless masses?
It is highly unlikely. The devil is in the details. There is a 10-year moratorium on the transfer or sale of a PR1MA house and it must be owner-occupied, which is absolutely justified. We don’t want these units to be traded recklessly by wanton property flippers.
But what happens after the moratorium? Are there any guidelines or controls to ensure that these units are not subsequently resold in the secondary market like any other housing unit, making it vulnerable to speculators and profiteering? Shockingly, there are none.
Basically, after 10 years, a PR1MA home owner is free to do whatever he wants with the unit, within legal boundaries of course. PR1MA only imposes its authority on the unit owners within the first decade and then cuts them loose to face the whims and fancies of market forces.
The affordable units that are purpose built by PR1MA to assist a specific category of needy buyers are then floated into the mainstream after 10 years, making them vulnerable to the vagaries of the property market. What good does that do to the affordable housing agenda? None whatsoever.
Ten years is not a long time. If PR1MA manages to build 500,000 units by 2018, technically these units could no longer be categorised as affordable by 2028 or even earlier. The owners are then free to sell them on the open market at whatever price they can fetch. If there is strong market demand, these PR1MA units could rocket beyond the reach of their intended buyers.
Which would be deeply ironic, because this defeats the purpose of building them in the first place, at subsidised prices using taxpayers’ money.
PR1MA is just one example of our lack of systematic approach in tackling the problem. We also need a comprehensive database of buyers and sellers of these affordable units. The government clearly needs to take a longer view of the affordable housing agenda. What we lack is a central agency or authority to overlook the implementation and enforcement of all the initiatives.
Perhaps we could look at our neighbours Singapore and their Housing Development Board (HDB) as a point of reference.
The HDB regulates the resale of its public housing units even after the “no selling” moratorium period. The unit owners may sell their units after the moratorium period but there are strict guidelines.
For example, after receiving an application for the resale application, the HDB will assess both the buyer’s eligibility to buy and the seller’s eligibility to sell the unit. Both parties need to comply with eligibility conditions and resale requirements for the resale application to be approved.
If the buyer is found to already own a private or landed property, he or she is not allowed to buy a HDB flat. A valuation officer from HDB will normally inspect the premises before a resale and there will be a guideline price provided by HDB.
Do we have the same comprehensive approach for affordable units in Malaysia such as the ones built by PR1MA? Sadly, at the moment, no.
Although the intentions are good, our implementation smacks of short termism. The Malaysian government’s efforts are laudable but deeply flawed. The affordable housing issue is being addressed but in a fragmented way without a real sense of cohesion.
Other than facilitating an orderly manner of resale, the HDB regulations also ensure that although the units appreciate in value over time, they will not be susceptible to price manipulations of property speculators, protecting future buyers of these affordable housing units.
More importantly, these HDB units end up in the hands of the people that they are intended for. Ultimately, isn’t that the end game in affordable housing? Unfortunately, in Malaysia it is not always the case.
GRRRRR!!!
Yesterday: Could there be another bubble?
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