For many, there are a few necessities in life. The basics include food on the table, clothes on one’s back and a roof over one’s head.
In large part, poverty reduction and programmes by the Government to ensure Malaysians get the minimum calorie intake, have been a success, and clothes have never really been an issue in this country. But in recent times, it has been a stretch for the average Malaysian to afford a home. Prices of property in the hot areas of the Klang Valley rose between 30% and 40% last year, and home price inflation now appears to be spreading elsewhere in the country.
Having a house has always been part of the Malaysian dream. For a long time prior to the boom years of the 1990s, home ownership had been affordable for most of the population. But the increase in the cost of living, led undoubtedly by price hikes of goods and sundries, together with escalating house prices, has made it harder for Malaysians to afford homes. This is especially tough for the younger Generation Y, whose wage increases have in no way kept pace with house price inflation over the past 10 years.
A rudimentary indicator of house affordability is the cost of a normal double-storey terrace house as a multiple of a person’s annual salary. For a long time, the norm has been between 4 and 5 times, but the recent price rise has pushed that to 6 to 8 times. When added to the cost of living, that makes home ownership a distant dream for many of today’s young. The solution for that problem, however, may be imminent as the Government is proposing that we have a National Housing Policy.
So far, national housing schemes have been for government employees. Quarters for teachers, the police and the armed forces have been constructed for decades, but the provision of homes for other Malaysians has been lacking so far. Much of that supply has been left to the private sector to fill, but with prices of homes skyrocketing, and likewise the price of land, the private sector has in recent years concentrated on where the money is – high-end homes.
It appears now, though, that the Government will next tackle the building of homes for the private sector and the everyday Malaysians. There is good reason for that. Feeling disenfranchised in one’s own country would not be good for political reasons, and getting down to addressing the issue of affordable housing is a must before the negative sentiments fester and overflow into a backlash.
Late last week, the Government announced that the National Housing Policy would address issues such as abandoned projects, the building of affordable housing and allowing people to rent homes at a reasonable cost.
At face value, the National Housing Policy appears to be a copy of the successful national housing scheme from elsewhere in this part of the world, namely Singapore’s Housing Development Board (HDB).
Initially set up to ensure every Singaporean has a place to stay, HDB flats and apartments now house 80% of the republic’s population. In the process of building such high-rise housing, HDB also created mini townships that catered to the basic needs of Singaporeans.
Some observers feel the Malaysian government could use quotas to ensure that residents in future national housing projects reflect the social makeup of Malaysia. “The government has a lot of land and greenfield areas which could be developed,’’ says DTZ Nawawi Tie Leung executive director Brian Koh. “That should be developed on a joint-ventures basis with a private developer.’’
Koh also suggest developers get a slice of the property being built for affordable housing as a sweetener for their own development plans.
Although there is a requirement for developers to include low-cost housing components in their projects, this is hardly adhered to these days. The absence of large-scale townships makes it uneconomical to comply with this ruling because most of today’s development projects are on much smaller plots of land.
News of a housing policy for all would go a long way in addressing the concerns of home ownership, but such a move would not be sufficient if it only caters for the low-income segment. Years of urban migration has seen population of towns swell, and the high prices of homes in urban areas make it imperative for the government to also deal with medium-cost houses and property for the middle-class and the upper middle-class.
Unlike in Singapore, land matters in Malaysia falls under the jurisdiction of state governments. Therefore, for the proposed National Housing Policy to succeed, especially in the Klang Valley, the Federal Government and the state governments will have to work in unison to build such homes. Shows of political brinkmanship would not serve any party as housing is a matter that deeply affects all Malaysians.
“In this case, everybody has to work together,’’ says AmResearch senior economist Manokaran Mottain.