Affordability Tops Housing Issues in 2018
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The year 2018 has been a year of consolidation for the property industry as both the Pakatan Harapan-led government and property developers grappled with ways to offer affordable houses to resolve the housing woes especially of the Bottom 40 (B40) of the population.
Lawyer, Chris Tan Chur Pim of Chur Associates, said the supply and demand mismatch in the affordable houses category remained a key issue despite various initiatives taken by the previous government.
“The mixed product that was offered in the market was just not sufficient and the affordable range offered by private developers was not a good match.
“We think it (houses) was build more for the upper B40 or the lower Middle 40 (M40) group because most of the B40 have no access to financing as conventional bank terms were not modelled to meet their requirement.
“However, since PH took over, we think the government has been very open in finding alternatives in helping people own their first house and developers too are being assisted in reducing the overhang of properties,” Tan told Bernama.
The PH government is trying to implement various measures at the Federal level, emulating what the opposition-led government did then in states like Selangor and Penang.
For instance, the Selangor government initiated the ‘’Rumah Selangorku’’ housing programme which provided several financing options.
This were among the examples which prompted the Federal government to be more open in providing funding alternatives, thus, the ‘’FundMyHome’’ initiative was announced during the 2019 Budget.
Tan said having the house buyer to come up with the 20 per cent down payment and the balance to be raised from institutions or individuals, signified that housing loans methods were changing in accordance with the pressing need for financing and when banks could not provide that bridging facility.
“This new loan model is an investment that offers an alternative to house ownership and personally we think it is a good start.
“However, the details of FundMyHome will only be finalised in the first quarter of 2019,” added Tan.
The government in its 2019 Budget also announced several moves to boost the property sector including the RM25 million allocation to Cagamas Bhd for mortgage guarantee for first-time buyers earning up to RM5,000 monthly, which was deemed positive by the Real Estate and Housing Developers Association (REHDA).
“Coupled with the stamp duty exemption on transfer instruments for the purchase of first houses priced between RM300,001 and RM1 million, it is indeed a step in the right direction towards encouraging people to own properties, which is an effective wealth-creating instrument,” said REDHA President Datuk Soam Heng Choon.
He pointed out that the stamp duty waiver for houses costing up to RM500,000 and the RM1 million to help first-time homebuyers with household incomes of below RM2,300 to acquire a house of up to RM150,000 at a low financing rate of up to 3.5 per cent per annum, were also expected to boost house ownership.
In the meantime, the RM1.5 billion allocated for affordable housing projects under the People’s Housing Programme, the Malaysia Civil Servants Housing Programme (PPA1M), Perbadanan PR1MA Malaysia (PR1MA) and Syarikat Perumahan Nasional Bhd (SPNB) would also ensure that affordable houses continue to be made available for those who are eligible.
Besides, the exemption of construction services from the Sales and Services Tax (SST) and as principally agreed for utility firms to build their own amenities as part of efforts to help reduce compliance costs, are expected to enable developers to reduce house prices.
On a related matter, Housing and Local Government Minister Zuraida Kamaruddin introduced three new categories of affordable houses, namely, those costing RM150,000 and below, RM150,000 to RM300,000; and of RM300,000 to RM500,000.
She also said that all housing projects under the five housing entities namely PR1MA; PPA1M; UDA Holdings Bhd; SPNB; and the Hardcore Poor Housing Programme (PPRT), would be streamlined under one programme.
As for the performance of the property market during the year, according to the National Property Information Centre (NAPIC), a marginal decline in market activity was recorded in the first half of this year in line with the challenging economic and financial situation.
As revealed in the ‘’Property Market Report for First Half (1H) 2018’’, prepared by the Valuation and Property Services Department of the Ministry of Finance, 149,889 transactions, worth RM67.74 billion, were recorded during the period, down 2.4 per cent and 0.1 per cent, respectively, compared with 153,526 transactions valued at RM67.83 billion recorded in 1H 2017.
The residential sub-sector continued to lead the overall market, contributing 62.8 per cent and 46.7 per cent in volume and value, respectively.
The amount of loans applied for the purchase of residential properties, however, decreased 3.1 per cent while the approved loans fell 0.2 per cent.
NAPIC also revealed, in its report, an increase in the oversupply of residential properties, with the numbers rising 18.1 per cent in the first six months of this year to 29,227 units from 24,738 units in the second half (2H) of 2017.
The number of unsold units too rose 21.9 per cent to 75,445 units for under-construction projects from 61,882 units in 2H 2017 while those for projects not constructed yet increased 69.9 per cent to 21,446 units from 12,626 units previously.
As for new launches, the report showed a decrease of 7.1 per cent in 1H 2018 with 37,723 units compared with 36,955 units recorded in 2H 2017.
Of this, Kuala Lumpur showed a decrease of 18.6 per cent, Selangor with a significant decline of 55.9 per cent while Johor saw a minimal increase of 8.3 per cent over the same period last year.
Sales performance was still low, down 19.2 per cent, across the board.
On the outlook for the property market, PropertyGuru Malaysia Country Manager Sheldon Fernandez expected the downward trend to likely continue into the first half of 2019.
“However, a continued, but stable price downtrend, is not necessarily a negative development as shown over the past two-three years, as present market conditions have compelled developers and private sellers to be more competitive in terms of quality, design ideas, ownership packages, as well as, pricing.
“However, there is a chance of a market recovery – post third or fourth quarter of 2019,” he added.
The initial optimism, expressed post the 14th General Election, is beginning to wear off as buyers are adopting a more cautious approach.
“It is a healthy situation. There is plenty of supply for both the purchase and rental for Malaysians to choose from and the sluggish conditions are also encouraging greater innovation and ideas to come to the fore, especially with regards design, spatial use, technology and more,” added Fernandez.