Lament of the neglected  “middle child” Lament of the neglected  “middle child”
Share this on WhatsApp  BY Roznah Abdul Jabbar For several years now, affordable housing has been the cry of the rakyat. In response, the... Lament of the neglected  “middle child”


BY Roznah Abdul Jabbar

For several years now, affordable housing has been the cry of the rakyat. In response, the government has announced a number of initiatives aimed at meeting this demand. However, while there has been a steady flow of low-cost homes over the last decade, not much has been catered to middle-income earners.

A research paper in the International Journal of Social Science and Humanity titled “Affordable Housing Policy: Issues and Challenges among Middle Income Group” said housing affordability issues have never been dealt with thoroughly and there have been no specific studies on the issue in the past years.


In the 10th Malaysia Plan (10MP), the government focused on building houses in suitable locations and more conducive environments for low-income groups.

However, the research found that many households are not covered by the housing assistance programme, because they are stuck in the middle-income trap; they are not qualified for low-cost housing and cannot afford to buy into “medium cost” residential projects.

“In spite of that, it was evident that little research has addressed the affordability problem faced by the middle-income households. Housing policy needs to be addressed widely as an important issue faced by citizens,” it said.

The middle-income groups, which represent 40 per cent of Malaysian population, are left on their own to face the challenge of home ownership.

The research indicated that the country needs to look earnestly at the issues of increasing house prices, strict housing loan, insufficient choice for middle-income groups in terms of strategic location and housing policies and schemes that need to be revised, in order to support the livelihood of the people.

While the announcements of schemes such as the My First Home Scheme (MFHS) and 1Malaysia People’s Housing Programme (PR1MA) were initially applauded, the hope has since diminished because of the ambiguity of these schemes.

HBA’s secretary-general Chang Kim Loong said that the implementation of these schemes has been pretty disappointing. He said that the PR1MA initiative is not enough and the scheme has seen very little progress since its inception.

He claimed that the initiative was derived from HBA’s suggestion five years ago to unlock government landbank for housing development to cater to younger generations and particularly first home buyers.

He said that buyers are still not clear as to why the houses developed under PR1MA are priced up to RM400,000 (or more) when no land cost is involved.

The recently implemented First Home Deposit Funding Scheme (MyDeposit) has also received sceptical response.

It was reported that economist Muhammad Ridhuan Bos Abdullah said that although the new scheme is a good initiative by the government, it would serve little purpose if first-time house buyers are unable to find suitable units to buy.

He said that the main issue is not the financial assistance but the number of affordably-priced houses available for the target group.

Ridhuan, who is a senior lecturer at Universiti Utara Malaysia’s School of Economics, Finance and Banking, said that the government should first look into increasing the supply of affordably-priced houses in view of the high demand for such units.

“It’s better to resolve the core issue first before introducing other (helpful) mechanisms or strategies,” he said.

MyDeposit, which was announced in Budget 2016, was implemented on Apr 6 and under this scheme, first-time house buyers from households with a monthly income of between RM3,000 and RM10,000 will receive a contribution of 10 per cent of the sale price or a maximum of RM30,000 (whichever is lower) to help them buy units priced at RM500,000 and below. A total of RM200 million has been allocated for its implementation.

According to Bank Negara Malaysia’s 2015 Annual Report, Malaysia has an undersupply of affordable housing, particularly in major urban areas.

Ridhuan said based on this, the government should pay more attention to the house price-to-household income ratio.

BNM’s 2014 statistics showed a house price-to-income ratio of 4.4, indicating that average house prices were 4.4 times the average annual household income.

He said that the growth in household income has been lower than that of house prices in general, where between 2009 and 2014, the average household income rose by 7.3 per cent, whereas house prices in average increased by 7.9 per cent.

“This [higher house prices] can have a macro economic impact on a household’s expenditure pattern and its ability to repay [the housing loan], as well as spend on daily essentials and services,” he said.


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