OWNING a home is central to freeing those in need of help from the grip of poverty. When concerns about regular payment to a landlord for the use of property are no longer dominating their budget, people can use the money on food, clothing and other necessities. Oppressive rents are not the only reason for Malaysian renters, especially those in the low- and middle-income groups, to feel disgruntled. Too many of them, and their children, are housed in substandard conditions that they are at risk of respiratory illnesses and infections. They are at the wrong end of a market that combines soaring prices with no tenant protection.
That is why it is so disheartening to find that average house prices in Malaysia are more than four times the median income, which make such properties “seriously unaffordable”, according to a recent report titled “Making Housing Affordable” by Khazanah Research Institute (Khazanah Research), a government think tank. The Malaysian all-house price had rose at a compounded annual growth rate (CAGR) of 3.1 per cent from 2000 to 2009. However, between 2009 and 2014, it grew at a CAGR of 10.1 per cent, which was almost three times more than from 2000 to 2009. You can expect higher price increases for properties in urban and suburban areas in the Klang Valley, Penang and Johor Baru. Soaring house prices have made home ownership a distant dream for many, stalling their way to a better life. It is anybody’s guess how long people would be stuck in limbo, but the wait to own a decent home might take forever. Malaysia’s young population appears destined for a lifetime in rented housing or living with their parents or relatives.
The government has always paid particular attention to providing homes for the lower-income group, but an emerging concern is the housing needs of middle-income households who are neither eligible for social housing nor able to afford houses — prices of which have skyrocketed — in the private sector. But the provision of social housing for the majority of the population will exert unnecessary financial pressure on government spending, as noted by the Khazanah report. The problem is not acute now, but the demand for affordable housing will rise as the country becomes more urbanised. Trends indicate that both the bottom 40 per cent and middle 40 per cent of income earners are likely to require social housing if interventions are not forthcoming. Efforts should focus on expanding housing supply, containing cost escalations, including reducing red tape and bureaucracy, and keeping credit growth under control, says Sunway University Business School’s Professor of Economics Dr Yeah Kim Leng. Imbalances between supply and demand will cause property prices to deviate from long-term trends.
On a brighter note, the government aims to build one million affordable homes by 2018. A total of 183,755 units have been constructed, while 214,011 are under construction. The rest are in various stages of planning. The facts point to an urgent need for reasonably priced, well-situated homes to cater to households of different income segments.