Driving home a few points


THREE years after the spike in property prices, a roundtable discussion was finally held with the guest-of-honour being the Housing and Local Government Minister Datuk Seri Chor Chee Heung.

Normally, for such events, the guest-of-honour will take his leave after the opening ceremony. Instead, Chor sat through the presentation given by three speakers. After hearing them out, he called on the speakers and those present to put on their thinking caps and come up with solutions to overcome the issue of affordability among the middle-income group. He would present the suggestions to the Cabinet.

Chor: ‘We are now grappling with the challenge on how to provide adequate housing for the middle-income group.’ Chor: ‘We are now grappling with the challenge on how to provide adequate housing for the middle-income group.’

“Affordable housing has become an important topic, with the greatest need being in urban centres like Kuala Lumpur and Penang and to a certain degree, in Johor Baru due to urban migration,” Chor said, adding that the middle-income group made up a large portion of the Malaysian population.

After the half-day presentation, a task force was set up to present the views of those present to the minister.

“We now have a direct line to the Government,” said Datuk Eddy Chen Lok Loi, Eastern Regional Organisation for Planning and Human Settlement’s (Earoph) deputy president.

The discussion Housing Affordability – Issues and Challenges was organised by Earoph and Rehda Institute, the education arm of the Real Estate Housing Developers Assocation (Rehda) in Petaling Jaya.

It was attended by a broad section of the property and construction sector, with representatives from the sector, house buyers, consumer associations and building material distributors.

Chen said: “We are now non-partisan. Whether we are developers, material suppliers or house buyers, we want to provide a forum for all stakeholders to find a solution to this affordability issue.”

It was felt that the first issue to consider was what constituted affordability.

Depending on the state and location, affordable housing is priced between RM80,000 and RM300,000. A low cost unit is RM42,000, depending on location. For every low cost housing built, a developer suffers a loss of between RM15,000 and RM50,000, which explains why the development of low-cost housing is an issue, says Rehda president Datuk Seri Michael Yam.

The task force will forward the day’s findings and solutions to the Ministry.

The two major issues raised were:

Instead of building low-cost housing, should the focus now be on affordable housing to meet today’s changing times?
Chen: ‘We now have a direct line to the Government.’ Chen: ‘We now have a direct line to the Government.’

Is it possible to do away with the various challenges and policies which contribute to the increase in house prices?

Yam posed the possibility of having private developers build affordable housing priced up to RM350,000 instead of having to build low-cost housing and to refurbish existing buildings in order to turn them into affordable housing projects.

Affordable housing should not be viewed in isolation but instead must be part of the larger issue of what constituted the well-being of a growing and progressing community. They have to exist alongside public transportation systems and basic amenities like schools and hospital facilities. And they must also not be of poor quality, said Yam.

In his keynote address, Chor said while low-cost housing was under the ambit of the ministry, affordable housing was not.

“We are now grappling with the challenge on how to provide adequate housing for the middle-income group,” he said.

He said in Japan, the middle income group has not been well looked after by the Government. Those in their 40s and 50s were still renting and they lived far from Tokyo where they worked and transportation cost was also high.

He said in Malaysia, there was a time when land and building materials were manageable and those in the middle-income group were able to buy their own houses but in a short span of time, the price of houses have gone beyond their reach.

“The Federal Government is not only landed with the issue of having to provide for the lower-income group but the middle-income group as well and here lies the challenge.

“We have to admit that we need the help of developers, non-governmental organisations and think-tanks to come up with a holistic solution,” he said.

Three issues stood out affordable land was scare; building materials cost were going up, with the latest being cement; and there was a mismatch between salary and property prices.

“Perhaps it is time for the Federal Government to relook the policy on low-cost housing and its practicality. Instead of building low-cost housing, is building higher cost housing a solution?

Saifuddin says the Government can re-introduce the Real Property Government Tax to curb speculation. Saifuddin says the Government can re-introduce the Real Property Government Tax to curb speculation.

“The PR1MA scheme is a laudable project… (but) it is moving sluggishly. We hope to see PR1MA making speedy progress. At the same time, we also hope the developers will play their role,” he said.

Any form of affordable housing will need the public transport element. With an efficient transport system, people will not need to live in or close to the city.

He said there were two elements to affordable housing: cost variable, which involved the cost of raw materials, land and construction, and the developers’ profit. There is also occupational variable, which takes into consideration transportation and building maintenance.

“There is no point buying a house in which the owner will have to fork out a lot of money to maintain it. When we talk about cost variables, one of the definations is to provide a house that is adequate in terms of quality and location that does not cost too much for maintenance.”

Chor highlighted the possibility of building no-frills housing like no-frills air travel.

In his paper, Pertubuhan Akitek Malaysia president Saifuddin Ahmad said the Government could re-introduce the Real Property Government Tax to curb speculation.

It could also consider the issue of responsible lending to local banks and implement PR1MA housing, he said.

The Government’s role included expediting the process of building plan approval, among other measures.

“Since only planning approval is required, the Housing and Local Government Ministry should issue a directive to all federal planning officials in the local authorities to accept planning approval submission by both architects and planners as provided for by the relevant Acts,” he wrote in his paper.

The role of the architects was to produce thoughtful, practical and sustainable design solutions in order to create a healthy place to live. “Encourage residents to claim ownership of their neighborhood,” he wrote.

He said it was important to incorporate green energy saving design elements for better building efficiency and minimal maintenance cost to the residents.

RAM Holdings Bhd chief economist Dr Yeah Kim Leng said the issue of affordable housing was predominant in the Klang Valley, Penang and, to a certain degree, Johor Baru.

“In some countries, there is a rent-to-buy concept where individuals go on to buy the unit when they can afford to. In London, some local councils help the young people who are born in that area to own houses. The council will pay 20% of the cost of the house. He can only sell it back to the council and if there is a gain, 20% of it goes to the council.”

– Malaysia Property News

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