PROPERTY prices are a favourite subject for conversation among Malaysians.
It is to be expected. Everyone is looking to buy a house or apartment, either to have a roof over his head or to sell it for a profit at some point in the future.
To have a house or apartment of your own has become a must for most of us Malaysians today, a condition further encouraged by the Government’s home ownership programme.
On the face of it, this is a good policy. Everyone should be given the opportunity to have a place of his own, a home that offers a decent level of comfort and well-being, yet within his means.
However for the average Malaysian, particularly those living in or around urban centres, the prices of property have risen so high that they can no longer afford to buy.
As an expert in the real estate sector in Malaysia pointed out recently, the prices of homes in a city such as Petaling Jaya have risen more than 30 times in the past 40 years. In the same period, salaries have gone up a mere 10 times.
As a result, people are now expected to downgrade – from a landed property to an apartment, usually. Even so, people are paying more in monthly instalments and taking longer – up to three times – to fully repay their home loans. In short, if you buy an apartment today, you will probably spend the rest of your working life paying for it.
As a result, they also end up paying a lot more in interest to the bank, compared with their parents or grandparents 30 or 40 years ago.
Given that 76% or five million households in Malaysia have incomes below RM5,000 a month, many homes on the market today are priced beyond their affordability.
In addressing this issue, the Government has imposed a quota for low-cost housing projects. Private developers are expected to chip in by setting aside a certain percentage of their projects for low or medium cost homes.
More drastic measures have recently been proposed. For instance, the Kedah state government is mulling a proposal to require private developers to allocate up to 60% of their projects for affordable housing, up from 30% now.
Over and above this proposal, the PAS-led government is also mulling the possibility of restricting the sale of property in certain districts in Kedah to Kedahans only. The state believes this move would reduce speculation on property prices, thus ensuring that houses remain affordable for Kedahans.
Such proposals seem ill-conceived, to say the least. On the whole, be it at the federal or state level, a more strategic plan is necessary to meet the housing needs of those in the lower to middle income group.
At the same time, there must be room for a dynamic property market where investors can expect some returns for putting money into property.
Developers are well aware of the need to ensure that all Malaysians have equal access to housing that they can afford, and for the most part are supportive of any move to this end.
However, it must also be noted that for developers, other concerns come into play when planning and deciding on new projects, such as types of houses, price range and location.
As business entities, property development companies have to meet profit expectations of shareholders as well, and building homes and selling them at RM42,000 or below is certainly not going to help meet those expectations, especially in the urban centres where land costs are very high.
Another consideration is mobility. For the lower income group in particular, the ability to get around for work, school and other daily necessities at an affordable price is essential.
For the most part, it does not make sense for them to buy a low or medium cost home in a locality that is not served adequately by cheap public transportation to enable them to go to work or for their children to go to school.
For them, buying a car may not be an option, and taking the taxi to work is a luxury many cannot afford.
For these reasons, it makes sense for the Government to build affordable housing for the lower income group, with contributions to subsidise these projects funded by private developers.
Developers would have had to spend money anyway if they are to meet the quota of affordable housing in their respective projects. The money would be better used if it is channelled to the Government for a more strategically planned housing programme.
The Government could also ensure that the right infrastructure be put in place to ensure that those who buy into the low or medium cost homes that it is building also have access to affordable public transport and other facilities. With almost unlimited land bank, the Government could easily build a school within the development as well, thus meeting another essential need.
By taking full responsibility for affordable housing, the Government could also ensure that they are well maintained. For the most part, low-cost apartments in Malaysia are not well maintained.
If residents or owners fail to pay the monthly service charges regularly, there would not be sufficient funds to ensure proper maintenance. As a result, many of such apartment blocks end up looking like slums in just a few years.
Any attempt to control property prices runs against the free-market concept that we practise. For most of us, even those who buy a house to live in for the long term, putting money into property is a form of investment.
When we were younger and had just been married, we struggle to pay the mortgage for a house that we believe is reasonably big enough for our spouse and two or three children.
When our children are grown up and on their own, we may decide to sell the house and opt for a small apartment instead. Hopefully the house would have appreciated in value and there would be a decent sum left for our retirement.
Is that too much to expect?