Ernest Cheong told FMT if houses were built on land released by the government, the middle class would be able to afford them.
“If the government agrees to release its reserve land at no cost or nominal cost it would help to ease the shortage of affordable houses. With the land available at no cost or minimal cost, we only need to pay for construction costs, which can be adjusted. These houses would then become affordable to Malaysians.”
He said houses were costly now because they were built on expensive private land.
“If we consider the income of 89% of Malaysians to be RM5,000 and below a month, the affordable price for them would be not more than RM200,000 each,” he said.
Cheong said the shortage of affordable homes began 20 years ago and if only the government then had had the political will, the problem would not exist today.
Now, with the high cost of living and high national debt, it would be impossible for the government to solve this problem without the release of government reserve land, both federal and state, he said.
He was responding to Bank Negara Malaysia’s (BNM) recent report which said houses in the country were “seriously unaffordable” by international standards.
The central bank outlined five strategies to overcome the issue, including centralising affordable housing initiatives and setting up an integrated housing database and an applicant registry for planning and allocating affordable housing.
It also suggested reducing the cost barrier to affordable housing, rehabilitating household balance sheets by enhancing financial literacy and improving the rental market by strengthening the legal framework.
According to Cheong, the first three strategies had been done but they were not working, referring to the National Housing Department (Perbadanan Perumahan Negara) and PR1MA housing which also serves as an integrated centralised system.
He said, in the early 70s and 80s, state governments had low-cost housing programmes, where developers were required to have 20% low-cost housing (costing between RM25,000 and RM50,000) as a condition. However, he said, developers asked for exclusions, which were granted by the state and federal governments.
He said due to a lack of political will there was no specification for low-cost housing anymore.
He also said strategies outlined by the central bank were merely theoretical, and did not touch the reality on the ground.
Another property expert, Siva Shanker, the head of investments for Axis REIT Managers Berhad and past president of the Malaysian Institute of Estate Agents said there should be a centralised agency coordinating housing, a body that would bring all agencies related to housing under one roof .
A centralised database system and stringent monitoring of that system were also necessary, he added, as otherwise there was a risk of the properties going to people who might not qualify for affordable housing.
“What is important is that we should determine the definition of affordable housing so we can tackle the problem at the point where it’s needed most. The market continues to be mismatched with the available supply, not in line with people’s income.
“If people can only afford a RM200,000 property, how will they be able to purchase a unit if the available affordable houses are priced at, say, RM500,000 each? Of course then it will remain unsold.
“Apart from that, we can’t build the affordable houses in the middle of nowhere because people won’t buy when these properties are located in areas where there are no proper facilities.
“People who buy affordable houses may not have the luxury of owning cars. If the property is located in an area without proper facilities like public transport, how will they commute to work?” he asked.
Siva added that this might be one reason why so many affordable houses were reported to be unsold.
Siva said first time house buyers who qualified for subsidised affordable housing should be given financing alternatives. They could also be allowed to make staggered repayments.
Such a scheme would allow them to make lower repayments in the earlier years of the mortgage and gradually step up the quantum of payment as the years go by and their income improves.
“Let them start in small amounts, let’s say, RM500 for starters. Then, slowly over the years this amount is increased. At the end of the day, the bank gets back the full amount it is entitled to.”