The ongoing quest for affordability The ongoing quest for affordability
Share this on WhatsAppBY Gunaprasath Bupalan KUALA LUMPUR — In Malaysia today, we are faced with a strange irony. Despite the continued rise of... The ongoing quest for affordability

BY Gunaprasath Bupalan

KUALA LUMPUR — In Malaysia today, we are faced with a strange irony. Despite the continued rise of prices, demand for property remains strong (especially in the residential sub-segment).

It is evident that home ownership is a major priority among our countrymen, which means the drive to purchase a home can sometimes supersede unreasonably inflated prices, but now the inability the secure a loan is putting a serious dent in that appetite.

This has been clearly pointed out by Bank Negara Malaysia (BNM) statistics, which revealed an obvious decline in applications for housing loans during the first eight month of 2015. This is in conjuction with a high rate of loan rejections by the banks, amounting to just over 50 per cent.


Bank Negara revealed an obvious decline in applications for housing loans during the first eight month of 2015.

This fact, coupled with the rising cost of living has led to an increasingly audible clamour for affordable housing.

A report by Khazanah Research Institute (KRI) published late last year pronounced Malaysia’s housing market to be “seriously unaffordable”, with a median price of more than four times the median household income.

Budget 2015 discussed the issue of access to affordable housing, resulting in the introduction of government measures such as Youth Housing Scheme, which provides assistance to first-time homebuyers via a monthly RM200 allowance, 50 per cent stamp duty exemption on transfer of documents and loan agreements, as well as a 10 per cent loan guarantee.

Furthermore, a Rent-To-Own Scheme was introduced especially for those who are unable to get bank financing.

Budget 2016 did not offer as much as the market would have liked to see. Instead, real property gains tax remained the same, new stamp duty and regulations were imposed on foreign buyers, and the overall conclusion was that no further cooling measures were required.

However, there was an increase in the funds allocated for affordable housing which indicates that this is an area the government is focusing on. With that in mind, the government introduced the following measures:

i) First House Deposit Financing with RM200 million allocated to help affordable home buyers with their downpayments on their first home purchase. It is expected to benefit between 20,000 and 30,000 buyers.

ii) 20 per cent stamp duty exemption on Shariah-compliant loan instruments to finance the purchase of houses from January 1, 2016 until December 31, 2017.

In addition, the government shored up existing programmes such as the the 1Malaysia People’s Housing Programme (PR1MA), Programme Rumah Mesra Rakyat, People’s Housing Programme (PPR) and 1Malaysia Civil Servants Housing project (PPA1M).

More than 300,000 units of affordable homes have been planned under these programmes.

The Budget also set aside RM40 million for the rehabilitation of abandoned public housing projects, stamp duty exemption for contractors and the original buyers of the abandoned houses that need rescuing, as well as a RM60 million allocation for constructing homes for the Orang Asli community.


More than 300,000 units of affordable homes have been planned under government programmes.

The question that begs is, with all of the above initiatives, why are we still facing an “affordable housing crisis”?

The criticality of the issue was heavily discussed at this week’s Affordable Housing Conference 2016, which was a gathering agencies, developers, and affordable housing professionals across the country and the Asia Pacific Region.

In seeking to uncover and evaluate the challenges, opportunities and trends regarding affordable housing, many strong points were voiced out during the conference. However, one interesting perspective was put forward by conference speaker and chief executive officer of Ho Chin Soon Research, Ishmael Ho.

Ishmael pointed out that the use of land at the mouth of the MRT and LRT lines was a “wasted opportunity” because these parcels were not identified for building affordable homes. He said these land plots would have been most suitable and most beneficial to be used for such a purpose.

“I feel that a more radical approach needs to be taken on the affordable home topic. People should be allowed to buy homes based on their lifestyle comfort. For instance, those who are more settled in life, married and with a good paying jobs, should be expected to live a little further from the city centre, while priority for city centre because they can afford it. Convenient living solutions should be prioritised for single white collar workers who have just embarked on a working life,” Ishmael said.

While such a concept goes against the grain of the general capitalist ideals of convenience belonging to those who can afford it, Ishmael believes that this radical approach will alleviate much of our societal and economic problems.

Also discussed was the use of building integrated systems and prefabricated homes to bring down construction cost and house prices, but this was challenged by many attendees who highlighted major concerns regarding its use.

While the method of building undoubtedly saves time and cost, many property professionals contend that not many contractors have enough knowledge on the technology and implementation of BIS, which means it is far from ready for widespread use.

It was concluded that consultants such as CREAM and CIDB should do more pre-fab awareness campaigns and education to these category of people so that their mind-set is changed to try new things. But in the current economic scenario, this translates to “risky” for many.

On the topic of Waqf Land being used to build affordable homes, many participants were in agreement that this was a viable option to consider.

Waqf land could be utilised to house affordable units.

Waqf land could be utilised to house affordable units.

According to the Jabatan Wakaf, Zakat Dan Haji JAWHAR (2013), there are over 8,861.15 hectares of waqf land in Malaysia. A total of 4,543.27 hectares of the land have been categorised as wakaf khusus or special waqf (any form of dedication or endowment precisely declared for specific purposes or special beneficiaries) while 4317.88 hectares have been categorised as waqf am or general waqf (any form of charitable dedication or endowment made to support all public welfare purposes without stating any special beneficiaries; be it any individuals, organizations or institutions).

If these parcels are efficiently managed and developed, they could yield billions in income to the Muslim communities. Unfortunately, waqf institutions in Malaysia seem to fail to play a dynamic role in uplifting the development and economy of the Muslims.

This may be due to several factors: issues surrounding the ownership and registration of waqf land; Lack of capital and limited financial resources; Most waqf land areas are located in less strategic rural locations; lack of efficiency in the management of waqf land have resulted in inept and very slow registration process; lack of comprehensive data on status, size and type of land parcels; and illegal occupation by settlers.

“There needs to be a proper authority on Waqf Land conversion. Each piece of land could have more than 100 shared title owners. It takes a lot of dedication, patience, determination and self-motivation to get it done. Hence why till today it is so difficult to accomplish”, said land law expert Professor Datuk Dr Nik Mohd Zain Nik Yusof.

“If there was a proper authority to handle this matter, the issue of affordable housing wouldn’t need discussion or debates today”, he added.

Ultimately, the inescapable conclusion to the affordable home quandary is no real progress can be expected unless there is strong directive by the federal government and greater accommodation by state governments in terms of proper land alienation. Both of which require stronger political will from the people of Malaysia.






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