THE Pakatan Harapan (PH) government, through its manifesto, has promised to increase the number of affordable housing for purchase and rental.  

PH does concede that there is an issue of housing affordability brewing in Malaysia where many younger Malaysians are being priced out of a decent home. And most recently, Finance Minister Lim Guan Eng has also reiterated PH’s desire to provide “housing for all” through PH’s latest budget. Under the PH administration, construction of popular affordable housing schemes such as Program Perumahan Rakyat (PPR), Perumahan Rakyat 1 Malaysia (PR1MA) would be continued with an allocation of RM1.5 billion and there will be a RM1 billion fund established by Bank Negara Malaysia (BNM) to assist mostly B40s to purchase affordable homes. 

However, it remains to be seen the PH brand of loosening accessibility of loans, incentivising developers to build more affordable homes and modest construction of public housing such as PPR could solve the ongoing housing issue

A recent Bank Negara Report lay bare the challenges faced by affordable housing, by spelling out the cause of why housing has become increasingly unaffordable.

Firstly, the growth in the prices of homes have been outpacing the growth in household income, which only accentuates the problem of housing affordability for common households. In fact, during the period 2012-2014, the growth in housing prices (26.5%) was more than doubled the growth in income levels (12.4%). 

If this trend were to persist, housing could well become a luxury that even the upper M40s will have trouble financing. This is arguably the main reason why decent homes has remained out of reach to most households despite the availability of bank financing. 

Perhaps the government might also want to acknowledge that the problem of housing affordability does not necessarily confined itself to merely solving the mismatch of demand and supply of housing market in Malaysia. 

With income growth lagging behind the growth in home prices, the problem of overhang residential properties in Malaysia is the inevitable corollary of such inequality. The numbers of overhang properties in Malaysia certainly does not make for pleasant reading with an estimated RM22 billion worth of residential properties remain unsold as of March 31, 2018 according to the finance minister in his budget speech. Moreover, the value of unsold residential properties in 2017 were only RM13.3 billion and it rises by almost 65% in just a year. 

The problem of overhang properties shows no sign of dissipating as more and more properties are left empty, while housing remain unaffordable. Theoretically, market logic would dictate that the oversupply of housing market would force a downward pressure towards housing market but even its price was reduced, the decrease is unlikely to benefit the majority of Malaysians as growth of income is too miniscule. 

Overhang properties are also due to a mismatch of demand and supply of the housing markets, whereby properties which falls within the unaffordable range were built at the expense of potential affordable units. 

BNM, again, suggested that the majority of unsold homes during the first quarter of 2016 were those in the non-affordable price category (79.1%). At the same time, the undersupply of affordable homes fails to catch up with the ever increasing demand of households. 

There is certainly no short term solution to some of the challenges which was shown in Malaysia’s housing market. However, “housing for all” remains a noble goal and we should try our best to achieve it. 

For a start, the government could centralise its government housing agencies into a single entity which could help in improving housing policy coordination and smoothen the process of resources allocation. 

At present, there are too many government agencies in charge of housing planning, the notable examples being the Housing and Local Government and the Federal Territories Ministries and various state governments. The centralisation of various agencies would no doubt help the PH government in meeting its housing construction target. 

The mid-term review of the 11th Malaysia Plan 2016 – 2020 has even conceded that the mismatch in supply and demand of affordable housing was due to lack of integrated planning and coordination between state governments, developers and related agencies. In Singapore, the duty of managing and building affordable public housing falls solely on the Housing and Development Board (HDB). To date, more than a million HDB flats have been built to house more than 80% Singaporeans. 

The government could also revitalise and seek to popularise public housing again. If the units of available public housing were to increase, they could create another avenue for aspiring homeowners and potentially ease the upward pressure on prices of private homes. Currently, the limited public housing programmes in Malaysia are mostly skewed towards the B40 and to a lesser extent, the lower M40 households, and yet the problem of affordability is arguably most severe among the M40s. 

It is possible for the government to expand the existing public housing programmes for the M40 but often this involves a significant increase in the housing budget and the perception of public housing has often been negative and always been viewed as housing of last resort. But public housing – with its generous pricing scheme – is by far the only way to provide decent homes if income growth still fails to catch up with housing prices and the mismatch of housing demand and supply continues. 

Thus, it is about time we bring back the debate on the viability of public housing in Malaysia, and I would argue the need has never been greater since the post-war period. As public housing was first popularised in post-war construction in the 20th century, when people were struggling for a shelter, ought not we to do the same – if not more – to rethink and universalise the idea of public housing again to meet the housing affordability challenges of the 21st century? – November 20, 2018.

* Kenneth Cheng has always been interested in the interplay between human rights and government but more importantly he is a father of two cats, Tangyuan and Toufu. When he is not attending to his feline matters, he is most likely reading books about politics and human rights or playing video games. He is a firm believer in the dictum “power concedes nothing without a demand. It never did and it never will”.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.