Dilemma of the have-nots
WHEN you tell somebody you’ll meet them between 7.30pm and 8pm, you already have it in your mind you’ll be seeing them “around 8pm”. That’s Malaysian standard time for you.
Conversely, when a shopkeeper tells you his product costs from RM1, you base your decision to purchase on that figure and probably kick up a fuss if it’s anything more – never mind the fine print.
What then of the government’s move to raise the income bracket for homebuying eligibility under the My First Home Scheme (MFHS) from RM3,000 a month to RM5,000 for individuals and from RM6,000 to RM10,000 for joint purchasers?
While on the surface it appears that the pool of potential buyers has expanded with the higher limit, the perception that is gaining credence is that the suppliers of such first-time houses, namely private developers as well as the government’s Perumahan Rakyat 1Malaysia Bhd (PR1MA), will focus on those at the new, higher income level.
That’s obvious because that is where the margins are. Hence, for those earning RM4,000 or less, purchasing their dream first house could remain just that – a dream.
As it is, in parts of the country, a RM250,000 unit is already being considered low-cost, so meeting the housing demand of those earning RM4,000 or less is bound to remain a daunting task.
PR1MA is the People’s Housing Programme that aims to provide affordable housing for middle-income earners who find it difficult to own homes due to the escalating prices.
The latest scheme under this programme was announced by Prime Minister Datuk Seri Najib Razak this week: Some 5,000 housing units in the Seremban Sentral PR1MA project will be completed by 2016 and are expected to benefit some 20,000 households.
The project, expected to cost RM2.5 billion, is a public-private partnership between PR1MA, the Public-Private Partnership Unit, Railway Assets Corporation, rail service provider KTM Bhd, the Negri Sembilan government and developer Brunsfield Group.
“The houses will be priced at least 20% lower than the market price, and are for households earning between RM2,500 and RM7,500,” said Najib. Nothing said about how many of the 5,000 housing units will be priced for those earning RM4,000 or less. And is RM7,500 to be the new ceiling?
Housing developers, of course, say that the concern over those earning less than RM4,000 being priced out of the affordability game is simply much ado about nothing.
According to Datuk Vincent Tiew, sales and marketing director with property developer Andaman Group, the pricing by developers takes into account such factors as project concept, location, product type and costs including that of land.
“Most developers do not intentionally target income groups but rather plan based on the most suitable project type for a specific location based on their costs and concept for that particular land,” he explains.
Tiew disagrees that housing affordability must necessarily be tied to salary or other income. His take: “Buyers generally come from different backgrounds and financial standing. There are buyers who co-own properties with family members for as long as they are comfortable.
“Some even have the means to fork out more cash upfront and end up taking a small loan from banks. For a RM5,000 income earner, it is safe to assume that the loan amount could be between RM200,000 and RM350,000 in normal circumstances.”
The Andaman Group, whose forte is guaranteed rental schemes particularly for student accommodation, plus taking commercial and residential development to Tier Three towns and undeveloped pockets in otherwise densely-developed areas, has been providing affordable homes for those earning RM1,500 and above from long before PR1MA was conceptualised.
“The prices of properties launched in the last three years by Andaman ranged from RM150,000 to RM550,000,” he points out.
On PR1MA, Tiew suggests that the government devise a better loan package for the lower income group. “The issue is not the higher income bracket buyers but rather the difficulty of low income earners to secure loans regardless of the prices of properties sought by buyers,” he adds.
Peter Chan is best known as the person behind The Haven, an upscale leasehold condominium development in Ipoh, Perak. But he has also been successful in lowcost and medium-range residential development.
He feels that the best remedy to the affordability issue is the raising of productivity. “Productivity will raise the real income of the people and they will be more competitive internationally in the delivering of goods and services.
“However, this will open up a huge Pandora’s Box of other issues. Sooner or later this matter will need to be addressed as this is the mother of all issues in Malaysia as well as elsewhere,” he argues.
The Johor government appears to have found a solution. It announced a policy change last month, under which there will be three pricing levels for affordable housing in the state: RM80,000, RM150,000 and RM220,000. This is besides the RM42,000 ceiling for low-cost homes.
The state government has been assured that 10,000 affordable units will be built under these three categories. This will be in addition to the 25,500 PR1MA homes slated for Johor.
The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) wants the government to consider a dual housing model to provide more affordable and quality houses for the low- and middle-income groups.
Its president, Choy Yue Kwong, recommends the practice in Singapore where the Housing Development Board (HDB) is responsible for providing affordable and quality homes for the masses while private developers cater to the others, including those seeking luxury homes.
Choy feels the government should play a bigger role in housing issues to ensure that the public has access to affordable and quality homes.
“We have a lot of land here. If it is organised properly, we can come up with HDB-type homes for the ordinary people. We can implement the model here and create a healthy living environment,” he contends, noting that while PR1MA has a similar intention there is still room for improvement through reorganisation.