The prolonged mismatch between the price of supplied property and the average affordability level of Malaysian citizens has prompted Bank Negara Malaysia (BNM) to be more vocal about the issue in recent months.
Having referred to the issue as “critical” late last year, it has subsequently made suggestions on how best to tackle the issue, including advocating a market that is primarily rental driven until the economy improves as well as collaborative partnerships between institutions and the private sector that will lead to the delivery of more cost-effective properties.
Recently, the central bank also called for a central authority to lead, oversee and coordinate affordable housing initiatives for the country and promote greater strategic and operational cohesion at the national level.
Among the biggest hurdles to solving the affordability crisis, BNM believes, is the lack of a coordinated effort that streamlines the goals from a commercial perspective as well as from a socio-economic perspective.
Deputy Governor Shaik Abdul Rasheed Abdul Ghaffour recently told Bernama that a sound, innovative and coordinated public policy is central to addressing the affordable housing challenge.
“Among others, the central authority can help regulate processes that increase the cost of supplying affordable homes by reviewing and streamlining it,” he said.
Shaik Abdul Rasheed added that such a body could also spearhead more effective communications and build stronger collaboration with key partners to advance the affordable housing agenda.
He said more needs to be done to increase awareness and further improve the take-up rate for financial assistance programmes introduced by the government. Currently, these include the My First Home Scheme, Housing Credit Guarantee Scheme, First Home Deposit Scheme, Flexible Financing Scheme for PRIMA homebuyers and the Flexible Financing Scheme for PR1MA homebuyers.
The government has already committed to building around 1,287,530 affordable residential units nationwide in 2017. However, this number is still deemed to be insufficient by many market experts given the increasing rate of urbanisation and the influx of migrants into key urban hubs in the country.
BNM, as well as other key market watchdogs, agree that a good working policy on affordable housing should encompass targeted public resources, participation by the private sector as well as a transparent and nimble regulatory environment.
The design of upcoming neighbourhoods within city limits, for example, should not only be focused the higher income groups and initiatives such as the Federal Territories Affordable Homes (RUMAWIP) programme should be intensified to cater to a more diverse group.
The Rent-to-Own Schemes (RTO) should be considered in housing policies, given that under current conditions, mid and lower income groups would struggle to catch up with rapidly rising house prices.
Without heightened focus on such initiatives, these income groups will never be able to own their own homes.
If a task force on the sustainable development of affordable housing were to be put in place, it would likely include the participation of the Ministry of Urban Well-Being, Housing and Local Government (KPKT), City Councils, state investment agencies, financial institutions and key members from the private sector.
It could also include BNM and institutions such as Cagamas, the Employees Provident Fund and Khazanah.
BNM said the central authority could also focus on issues such as the overhang in housing units, compliance of housing developers, effectiveness of a One-Stop-Centre and eliminating roadblocks to house ownership.
Ultimately, the central bank believes that considerable effort should go into developing a thriving rental market to reduce the supply-demand gap for affordable housing. This necessitates the strengthening of the legal and institutional frameworks governing the rental market.