KUALA LUMPUR: There must be a cleardefinition of "affordable housing" to prevent developers from labelling houses priced at RM500,000 as affordable, according to the National House Buyers Association (HBA).
Datuk Chang Kim Loong, HBA's honorary secretary general, expressed optimism about affordable housing and rising homeownership numbers in Malaysia.
However, he said that affordable housing must genuinely meet the needs of households with incomes at or below the median, as determined by a government-recognised housing affordability index.
"A home is more than a physical asset. It's a source of financial security in retirement. Every citizen aspires to have a roof over their head, and HBA urges the government to prioritise the people's interests over those of housing developers," said Chang.
HBA defines affordable housing according to three key criteria.
First, affordability means properties should be priced between RM150,000 and RM300,000, distinct from "social housing units" such as low and medium-cost housing priced below RM100,000, like People's Housing Projects (PPR), he told Business Times.
Secondly, affordable housing should be suitable for family living, with a minimum built-up area of 800 sq ft (excluding balconies) and at least two bedrooms.
Lastly, affordable housing should be in accessible areas with robust public transport links like LRT, MRT, and KTM and close to public amenities, including government schools, hospitals and hypermarkets.
Chang said the government's proposals in the 2025 Budget for the housing sector are well-considered and, if implemented correctly, could significantly increase the supply of affordable homes, addressing the risk of a "homeless generation."
"The past four years have been challenging, with Covid-19, floods, water pollution, changes in government leadership, inflation, rising food and utility costs, a shortage of well-paying jobs, and rising unemployment. These factors have dampened the hopes of many who are striving to overcome these hurdles," he added.
HBA has been advocating for the establishment of a Housing Index, noting that "different states and localities have varying standards or definitions of affordable housing."
Such an index could help developers better align their pricing with buyers' affordability in less-developed areas, addressing the current mismatch between what buyers can afford and developers' selling prices.
This disparity has led to a significant overhang of completed properties, as past statistics have shown.
Establishing a national housing trust
Real Estate and Housing Developers' Association (Rehda) president Datuk Ho Hon Sang recently proposed establishing a national affordable housing trust to ensure that affordable homes are built in areas with genuine demand.
Ho said while developers are committed to affordable housing, they often face a mismatch between supply and demand.
Data from the National Property Information Centre revealed that in the first quarter of 2024, 28.6 per cent of completed but unsold residential properties in Malaysia were priced below RM300,000.
"(The figure) highlights the mismatch of unsold affordable housing units. The focus should be on the right location, as some areas require more affordable housing units, while others require less due to the weak demand in those areas.
"There should be a more targeted solution rather than a one-shoe-fits-all approach to identifying the needs," Ho said.
Ho suggested that the trust's committee should include representatives from the Housing and Local Government Ministry, state authorities and Rehda, with developers contributing a portion of their gross development value.
The committee could then evaluate demand regionally, ensuring affordable housing is built strategically rather than following a non-market-driven quota that risks underserving or oversupplying areas.
Rehda also encouraged industry players to enhance affordability by offering subsidised loans for affordable housing through banks.
"Other incentives, such as discounts on premium charges, development charges, and Improvement Service Funds, will go a long way in making housing more affordable for the people," he said.
He expressed Rehda's support for the Madani housing concept and government initiatives aimed at expanding housing access, especially for the B40 and M40 groups.
In August, Prime Minister Datuk Seri Anwar Ibrahim directed the Federal Territories Department and Kuala Lumpur City Hall to integrate Madani housing blocks into all new residential projects, underscoring this as a condition for development approval to increase homeownership among low-income groups.
Affordable housing should vary by state
Samuel Tan, founder and chief executive officer of Olive Tree Property Consultants, said the definition of "affordable housing" should vary by state given each state's unique characteristics.
"For instance, a home priced at RM500,000 may be considered affordable in the Klang Valley but would be deemed luxurious in states like Kelantan or Perlis. It's essential for each state to define affordable housing based on local demographics," he told Business Times.
Tan asserted that price alone shouldn't determine affordability.
"I fully agree price should not be the only parameter for defining affordable housing. As this is a social matter, the well-being of the occupiers must be prioritised.
"Hence quantifiable criteria like the number of bedrooms and baths, floor area, and finishes must be spelt out clearly so that the people have a habitable space to live."
He also highlighted the importance of location, stressing that affordable housing should be situated in areas well-connected by public transportation and near essential amenities to meet residents' basic needs.
Housing woes - PPR or PRR?
Chang urged the government to reconsider the implementation of the Program Residensi Rakyat (PRR), a new public housing initiative by the Ministry of Housing and Local Government.
In the 2025 Budget, the government allocated nearly RM900 million to fund 48 PRR projects, aiming to complete 30 by the end of 2025 and accommodate roughly 17,500 residents, alongside 14 Rumah Mesra Rakyat projects.
"Now, it seems we have a new terminology in PRR, or People's Residential Programme and a huge sum has been allocated for this new programme.
"We don't have details of this PRR scheme, but we have voiced our utmost concern about the idea of PRR (Project Perumahan Rakyat), which was earlier this year announced by the Housing and Local Government Minister," he said.
Chang explained that the current social housing model, PPR, provides temporary accommodations for those working toward buying their own homes and should be rented out by designated agencies.
"The purpose is to offer interim housing to help people save toward homeownership. Those renting PPR flats should see them as temporary shelter for their families while they seek permanent homes."
While he acknowledged the noble intent behind the PRR, Chang suggested improvements to prevent financial strain on the government and ensure sustainable support for future low-income generations.
He noted that the construction cost per PRR unit is RM300,000, yet they are sold at RM60,000, with RM10,000 to RM15,000 of this set aside for maintenance and sinking funds. A 10-year moratorium on selling these units will also apply.
"HBA appreciates KPKT's efforts to expand social housing through PRR, but selling units at a heavy discount could harm future homeowners and the government," Chang said.
He pointed out key concerns such as a RM240,000 loss per unit, the potential for profiteering, inadequate maintenance practices, and the risk of benefiting one generation at the expense of the next.
"HBA can understand why the Madani government is taking such an initiative, as property prices have risen too rapidly in recent years.
"As noted in Bank Negara Malaysia's 2016 annual report, the increase in house prices in Malaysia since 2012 has outpaced the rise in income levels. Consequently, prevailing median house prices are beyond the reach of most Malaysians."
Tan, meanwhile, praised Johor's Rumah Iskandar initiative.
"This is a good model where the qualified people can rent from the state at a subsidised rental and with an option to buy later," he said.